Price it Right

I am a firm believer in pricing the listing right the first time as it will get the seller a higher price and also get you into closed quickly so you can move on and get those JUST SOLD in 5-10 days card out in the mail, I presume you are using them, and make you look like a star listing agent and get your phone ringing.

When ever I have a seller trying to over price which is more often than not, I frequently use The Charles Kimble story. I got this story from a friend of mine, Frank Arata Jr., Frank at that time was the President of Keyes Asset Management back in the 90’s who had recently attended a seminar given by the highly regarded economic consultant, you guessed it Charles Kimble and I have probably used it on 80% of all my listing appointments since then. I have tested the theory many times and it is totally true.

Twice in recent weeks. I overheard an associate negotiating an offer over the phone on a listing of his, the offer came in 21% below list price seller was at $275,000 buyer came in at $218,000 I told the agent it probably comped out in the low 250’s which he confirmed but was unable to bring the seller to reality. The seller not being able to accept reality from his agent, decides to engage an appraiser, which when appraised came in at $251,000 right on the moneyusing the Kimble technique . The second situation involved my daughter in law Kristy who was on the phone helping another associate when I happen to overhear a conversation reagarding an offer. I got the numbers from Kristy picked up a calculator, list price $469,000 offer 402,000 15% apart I said to Kristy that the house was probably only worth $435, 000, which the agent overheard, as they were on speakerphone she wanted to know how I knew that when I did not even know what property she was talking about, I replied, experience. She told me her comps were at that very number and that was her suggested list price to the seller.

Here it is. Buyers have a pretty good idea of property values, after all they have been looking at FSBO, every builder, and been going to open houses and are on their 5th Realtor . They know values even if they low ball their first offer. Charles Kimble says if you list your home 10% above true value your offers will come in 10% below true value, buyer thinks seller is joking so buyer plays with them seller lists 5% above buyer offers 5% below and so on . Most deals are made only when the seller is in 1to 3% of real value and if buyer comes in 2 % below because seller is 2% above one counter usually moves buyer to market value. The problem lies when the seller is unrealistic that the negotiating process becomes exhausting and frustrating for all, seller due to frustration settles for a lot less than he could have gotten had he just been realistic in the first place.

When I usually illustrate this on paper by drawing a straight line across the page, putting a 0 there and calling it ground zero, I then do list price 10% above buyer 10% below 5% above 5% below and illustrate how the offer and counter offer may play out with seller settling for a price below ground zero, practice and put in your ammo box and you will be sure to use it.