Pricing a home correctly is a critical factor in the success of a real estate transaction. In the Brooklyn market, there are common misconceptions among home sellers regarding pricing strategies. This blog post aims to shed light on these misconceptions and emphasize the significance of pricing a property at or around its market value.

1. The Pitfalls of Overpricing

Many sellers in Brooklyn believe that pricing a home higher than its market value will result in a higher selling price. However, this approach often leads to negative consequences. Overpricing can deter potential buyers and significantly reduce the activity and interest a property receives. Buyers tend to compare different properties and are less likely to consider an overpriced home when there are other reasonably priced options available. We’ve seen a lot of sellers make this mistake and the result is usually very little calls (if any) during the first few weeks, and a price adjustment to attempt to get “in the market”. You may think that there’s no harm in testing a higher price, but keep in mind that new listing alerts only go out once, and more importantly, you only get one chance to make a first impression. If buyers see that a property is overpriced, they usually write it off because they assume that the seller is not reasonable.

2. Educated Buyers and Online Resources

Buyers in today’s real estate market are well-informed and have access to extensive online resources and sales data. They conduct thorough research before making purchasing decisions and specifically here in Brooklyn, they can actually access recent closed sales because sale prices are public record in New York State. As a result, pricing a property above its market value is unlikely to fool knowledgeable buyers. They can easily compare prices, assess the value of a home, and identify overpriced listings. Perhaps in the past (when information was more scarce) it may have been possible to get a buyer to pay more than market value, but with access to sites like Zillow, Trulia, Streeteasy, etc. it is very hard to get anything past buyers. This is probably why when we sell homes, many times the offers end up coming in around the same price. Ultimately, it’s just important for sellers to acknowledge home buyers’ access to information and set realistic asking prices that make sense when compared to other active listings.

3. Competitive Pricing and Attracting Buyers

To maximize interest and hopefully generate offers, it’s crucial to price a property competitively. In other words, when you’re thinking of selling your home, you have to remember that you are essentially entering a competition, and once you go live, either you will sell your home, or you will help someone else sell theirs. By assessing the current competition in the area—similar properties currently for sale—sellers can gain insights into the market trends and position their listing accordingly. Before listing, take a look at the active inventory and put yourself in the buyer’s shoes. If you can do this objectively, you will be able to see where your property would need to be priced in order to offer more value than other listings. Pricing a home at a level that offers value compared to similar properties always increases the chances of attracting more buyers, agents, and ultimately, offers.

4. The Power of Market Value

Market value is really defined as “what a buyer is willing to pay for a property in the current market conditions”. While sellers may have personal attachments and sentimental value associated with their homes, it’s crucial to separate emotions from the pricing strategy. What you want to do is get a realistic idea of what a buyer will likely be willing to pay for your home, and then set a listing price that is somewhere around that value. Setting the asking price in line with market value ensures that the property aligns with buyer expectations and stands out as an attractive opportunity. If month’s supply in your area is very low (less than 5 months) then you may have more leverage in pricing higher above the market value, and on the other hand, if month’s supply in your area is very high (above 8 months) then you may have less leverage which means that you may need to price at or slightly below the estimated market value in order to generate more interest.

In the Brooklyn real estate market, pricing a home accurately is essential for a successful sale. Overpricing can hinder interest and reduce buyer activity, while underpricing may result in missed opportunities to maximize profit. By understanding the dynamics of the market, acknowledging educated buyers, and strategically pricing a property in line with market value, sellers can increase their chances of attracting more potential buyers and achieving a favorable outcome. Remember, the main objective is to position the property as a valuable listing that stands out among the competition 🙂