Explaining Pricing a Home Right vs High or Low

I recently had a coaching call and was able to explain an important principle I wanted to share with you all!
I wanted to share how to draw a picture to show your clients about pricing a home right, versus pricing it high or low. Check out the video where I share with you how to draw that picture and explain the effects each decision may have.
In this example, I believe they should list for $310,000. The seller states they have nothing to lose and think we should list for $320,000. I can get behind that if that is what the client wants, but first, I want to show them a graph.
In this graph, I like to draw for people what pricing high, pricing right, and pricing too low look like.
Pricing high - $320,000 in this example;
Often times I find that sellers say they have nothing to lose, so they may just want to test the market. What we find is that their days on the market when they start high extend out far. After this happens, Mr. and Mrs. Seller often reach out saying that nothing is happening so we decide it is time for a price modification. After you do so, the days on the market will continue, you might get some activity, and maybe an offer.
Here’s what we see when we’ve been on the market for so long. When we get that offer, it is actually lower. Not only that, they tend to have a lot of layers to it. Layers are things like closing costs, higher repair limits,lower earnest money, etc. Not only is the offer smaller, but now you have all of these layers.
Pricing low - $300,000 in this example;
Your days on the market may be really short and you will likely not have to make the price modification like you did when priced high. You will likely get an offer and here’s the cool thing, with this offer, you aren’t getting any or all of those layers. You may have 1-2, but not as much as when priced too high. The drawback is that offer may not be as high as it could be.
Pricing Right - $310,000 in this example;
When you price light and land right in the middle, you will likely sell in the normal days on the market. You will probably get an offer right around asking. Guess what, that offer is likely not to have many layers. In this scenario, you will likely end up exactly where you were listed or even more.
After drawing this out for your client, let them know it is their call. They get to drive the ship. You, as their agent, do this to offer some perspective on how this process would likely go depending on what they decide.
As always, reach out with any questions.
Hope you’re good.

[@jimmmm]

I am wondering if the buyer want too many layer in high price, the seller can also not sell to the buyer right? Like, you ask too much so there is no deal because i refuse to do the layer you say, I can wait for another buyer that is not asking too much.

[@patrickmkeller]

Hello! Absolutely, there's nothing in the process that requires you to sell, but we find over and over again in the real estate industry that the longer you are on the market, the less leverage you have as a seller. So, offers and subsequent offers typically include a lot of contingency layers and not great pricing.