Selling a luxury property in Boston’s competitive real estate market can be both exciting and daunting. One of the most critical steps in this process is determining the right price for your home. Here’s what sellers should know about pricing before listing their home.

Developing a Tailored Pricing Strategy

Effective communication about pricing strategies is key to a successful sale. An experienced professional will provide sellers with the data points for their pricing analysis. This allows sellers transparency into the pricing method used by their agent, and the rationale for their agent’s pricing suggestion. 

This collaborative approach encourages sellers to engage in the process, and have input in the pricing strategy for their property. During the consultation, the agent will give pricing options based on the goals of the seller. Understanding the seller’s motivation, and their desired goals, will determine the best pricing strategy to utilize. Here are several questions an agent may have for the owner: 

• What aspects of the sale are most important to you?
• Is your priority to sell quickly, the highest value, or both? 
• Are you willing to be patient for the right price?
• Do you have any special requests you need the buyer to grant? 
• Such as a desired closing date?  Or the ability to stay in the property after closing? 

Pricing Strategies

The Bidding War Number 

This is the listing price that will create multiple offers. Often resulting in over-ask offers, and sometimes waived contingencies. It often is a lower number to spark activity, but also a number that makes sellers nervous they are under pricing their home. When receiving multiple offers, the market typically corrects and offers come in over-ask. The competition created typically gives sellers the leverage, and the ability to dictate terms, or make special requests.

Pricing At Value

This is the number that accurately reflects value. This is the listing price that creates more balanced negotiation between buyer and seller, and usually results with just one offer. If there are multiple offers, offers are usually around listing price, and often still have contingencies. It does not create the same intensity as “the bidding war” number.” It can still generate multiple offers, but the competitive aspect is typically not as intense.

Premium Pricing

This is the listing price that is pushing the property’s value, but could require a price reduction. Sellers who value price above all often choose this strategy. Choosing to try a higher number, but also aware they may need to reduce price at a later date. This strategy is also appropriate for properties with a unique value proposition. This would be something buyers will pay a premium for, such as a view, parking, or a highly desired location. The risk of this pricing strategy is overpricing the home, or losing leverage in negotiations against a buyer, as it reduces competition. While the risk can be higher, so can the reward when done effectively. 

The Importance of a Comprehensive Market Analysis

Before setting a price, an experienced agent conducts a detailed market analysis. This process starts with both a macro overview of the neighborhood, which helps sellers understand how the market is performing. By examining broader trends in the area, sellers gain valuable insights into their local neighborhood market, and the most their home could demand for the neighborhood.

Once the big picture is established, the agent shifts focus to a micro analysis of the seller’s specific property. This involves looking at recent sales within the building, or immediately nearby. Using these sale comparables to come up with a price specific to the seller’s property, based on what the unit itself offers, and how it compares to the recently sold properties.

Understanding competition is equally important. A skilled agent will help sellers identify similar properties and highlight features that may affect buyer preferences. For example, if a penthouse unit lacks an elevator, the agent will explain how pricing it similarly to units in buildings with elevators hurts the seller. By illustrating the options buyers have at different price points, it ensures that sellers are considering all aspects of their property’s appeal. Especially when stacked up against competitors. 

Building Trust Through Open Communication

Trust is a cornerstone of the selling process, and a true professional understands the importance of fostering this trust through open communication. Before signing a listing agreement, an experienced agent will discuss various pricing strategies and market realities with the seller. Ensuring both parties have a comprehensive understanding of the market, and pricing options available. This collaborative dialogue is essential, and allows sellers to express their perceptions of their home’s value. It also allows the agent to provide a candid assessment grounded in current market conditions.

A seller cannot make the right decision for themselves if they are not given the right information. The seller and the agent can establish a productive, honest, and transparent working relationship by discussing various strategies and potential outcomes in advance. All of this leads to a smoother selling experience.