Dear Heather.

I am going to be putting my home on the market for sale soon. I have met with several different agents, all of whom have given me different suggested prices. How do I know what I should put it on the market for? Shall I just put it on at the highest suggested price and see what happens?

Seller

Dear Seller,

Overly optimistic and excited home sellers sometimes want to pick a sales price that is too high for the market, and they might base their decision on the rationale that dropping the sales price is easy to do. Secretly, they might also be wondering if their agent is suggesting a sales price to them that is too low, just to make a fast sale. That’s a normal fear harboured by many sellers who are unfamiliar with sales price strategies.

When a seller is uncomfortable, and perhaps a bit mistrusting, that’s a tough spot to be in. It’s understandable, though, that a seller might struggle with the pricing suggested by an agent because sellers often use a different set of criteria to determine price than an agent uses.

For example, a seller might know that a home a couple of roads over sold for $1,250,000, so they imagine their home is worth $1,250,000.

What they might not realise is that home a couple of roads over was much larger than their home or had more upgrades than their home, or perhaps that home had more privacy, or better views, which makes the market value of their home less.

Further, sellers are right to feel uncomfortable. Unless they sell real estate, they are probably not privileged to the finer nuances of pricing.

Plus, if they’ve interviewed a few agents, it can become even more difficult to figure out which agent to trust because they often don’t know what to do with the information they receive.

There are real estate agents who will tell you your house is worth more than it really is and will encourage you to list above market value, just so they can get the listing. Don’t be surprised if they are coming back to you in a month or two with the suggestion of a price reduction.

You may think you want to “test” the market. If that is the case my question would be this, do you want to test the market or do you want to sell your house? Because unfortunately it is not possible to do both.

Of course, the ultimate alternative is not to price the home too high to start with. Price it in line with the comparable sales, and do not compare homes that sold longer than three months ago. The market seems to be changing quickly at the moment, so make sure you are receiving up-to-date market intelligence.

1. When buyers spot a sales price reduction, their immediate reaction is “Will the price drop further?” They may think the sellers are desperate and would not be forced to drop the price if they had priced it correctly in the first place. Full list price offers may also be more difficult to achieve after a price reduction as many of the “qualified” buyers may have moved on to correctly priced inventory.

2. Dropping the sales price is telling the world the seller made a mistake and could not sell the property at the listed price, which might make buyers question the seller’s motivation. Buyers might also presume that a seller is greedy, which could make the seller difficult to deal with in a transaction.

3. A drop in the sales price is indicative of a lesser overall value in the buyer’s mind. The home loses some of its appeal.

It’s like stale bread or flat beer. The liveliness and excitement of a once superior product is greatly diminished.

4. Price drops generally happen after the home has been on the market for a while without any offers. Even if the seller has received offers, the buyers may suspect that nobody made an offer because the home is undesirable. The longer the days on market elicits a bad connotation, especially if other homes have quickly sold within a reasonable time period and this particular home has not.

In addition, by the time a price reduction occurs, the sellers might have already vacated the home and removed all of their furniture. Vacant homes typically do not show as well and sell for less than furnished homes.

• Heather Chilvers is among Coldwell Banker Bermuda Realty’s leading sales representatives. She has been working in real estate for 26 years. If you have a question for Heather, please contact her at hchilvers@brcl.bm or 332-1793. All questions will be treated in confidence.