Home Sellers make more money and sell faster with this strategy.

The Real Estate Market Has Changed: Your pricing strategy needs to be spot on. The key to a successful list price is “Relevant Pricing” by removing wiggle room.

August 24, 2022      By: Keith Robert Gordon


I get asked questions all the time from home sellers once listed in the MLS about showings and offers. If a home seller is not getting enough showings or offers the seller wonders what they should do next. Now that home sales and prices may have turned back to a normal real estate market it’s time for a new plan. Or should I say, bring out the old playbook that I have successfully used for decades.

Home prices weren’t much of a concern to buyers during the first and second quarters of 2022. Now that things are different following a 3.5% jump in interest rates, home sellers and listing agents need to recalibrate their strategies.

The bottom line is we are back to a normal pricing model where everything matters: By “everything,” I mean price.

Because of this change in market conditions, I now get asked by home sellers if increasing their list price will generate more serious offers. They also frequently ask me if showings will pick up after a holiday weekend such as the Fourth of July. Of course, we all are searching for the right answers.

In this Altru Realty blog I explore two negotiating concepts that may help home sellers get their list price right and if overpriced, how they should view a change in price. One concept is called “Trusting Buyers” and the other is “Relevant Pricing.” They go hand in hand.

What I have learned after selling some 4500 homes is a listing agent should not tell a seller what to do. In other words, sure I know how to sell a home in 20 days’ time for its highest value but that doesn’t mean the homeowner is necessarily ready to sell or wants my advice at that very moment. My approach to communicating with sellers has changed over time. I now use plenty of compassion when asking the homeowner how they feel about their current or proposed list price or changes to their list price. I want sellers on board. I want them to conclude what is best for them, not what I think is best for them or my company coffers. Getting a seller under contract in essence is really a personal thing.

The message here for listing agents is while it is true that your broker technically owns the listing it is equally true is no broker or Realtor owns the home we are selling. Only the homeowner oversees their own motivation and the price they feel comfortable with. Their motivation to sell at a certain price may come down to not having the time, energy or emotional fortitude to pack and move. It could be that their timing to move is dependent on another event that you have no idea about such as an infirmed parent in another town or a lease on a second property they own. So many variables to consider. And yes, it could be just about getting more money for the home but that too is a personal choice of the seller. All cases, no sales pitch can overcome that need.

The point here for listing agents is just let the seller call the shots about when they are ready lower their price and sell. I have found having compassion for sellers is the most important element to being a professional listing agent.

My mission is to be available, helpful, accurate, skillful, honest, and ready to negotiate and give advice that works for them not me.

That said there is only one highly qualified group of people that really know the true value of any home. Listing agents are employed to prove the value of a home which is a process of knowing beyond any doubt that the highest buyer was identified. And getting more than one offer is paramount to proving a high value sale.

I have an expression that doesn’t always go over well with sellers which is a concept called Trusting Buyers. It seems so odd that Trusting Buyers with your important home sale is exactly what needs to be done to generate the highest sale possible. But it is so true.

Nothing is more obvious to me about understanding this concept than looking back at what happened the past 12 months ending June 2022 where buyers pushed home values higher and higher until the Fed got it their way and finally stopped the insanity. This is what I am talking about. Those buyers fought tooth and nail to win the bid, often waving appraisals and inspections. So, the concept of Trusting Buyers was on full display. Sellers were forced to Trust Buyers because they had had no choice about it: get listed and stand back regardless of the list price. Buyers just fought to win the bid. But, in a normal market this doesn’t happen the same way. It’s slightly different. The concept of Trusting Buyers means it is always buyers that drive up prices or determine the final value whether a pandemic driven mania or a common pre-pandemic bidding war.

This latest phenomenon was a once in century event with interest rates under 3%, the market flooded with government cash, investors buying as much as 20% of the market while fighting alongside RIETs, flippers and oh yes, the basic homeowner. Not to mention the pandemic work for home thing. A perfect storm for a mammoth bidding war. But here is my point of this blog. My Pro Team at Altru Realty has been creating mini-bidding wars since 2012—well before this latest home buying craze. The concept is the same though.

In a stable market, when a homeowner lists with a Realtor, they typically add 10% wiggle room expecting a negotiating battle or possibly just being misled by an overly anxious listing agent saying things that may not be true to win the listing. Regardless of how that price was established the agent and homeowner fully intends on a sale lower than the list price. Of course, the backdrop is no one ever pays the “list” which is not true of course and part of the reason why the excessive wiggle room was added in the first place. In the end, after possibly after several price adjustments most listings sell 3% under list. This means the 10% over-priced sellers need to drop at least 7% to get an offer. This is so because buyers will offer 6% under a list price that is 3% over market value to meet that seller in the middle. That is the math that is important here. If listed 10% over the market the buyers will seldom offer 20% under list to meet the seller in the middle at their “buy value.” Have you ever seen a property on the market for 100 days? Possibly 200 days. After 30 days on the market, it may be a forgone conclusion that the home is overpriced by at least 7%.

We have already discussed Trusting Buyers which means it’s up to buyers to make offers and chase a property: not the seller or the listing agent to cajole them into making an offer by giving away a seller’s motivation, rotating pictures, changing the property description, or increasing the offered commission to buyer’s agents. These buyers have all the data on their phones and get real-time alerts. They have the same data as agents do!

The other key to a successful list price is “Relevant Pricing.” This means removing the 10% added wiggle room in your list price and creating your own bidding war. The buyers will make full price offers because all the other comparable listings are priced 10% higher. Your listing becomes the only game in town. It’s “relevant” to the buyers. That is also why buyers don’t walk away from their offers. They have nowhere to go.

But you must first trust that buyers are really your best friends to find a full value home sale. You need them. You need all of them—not just one outlier lowball offer. If a homeowner were to list at a value where most buyers would offer full price, then the two best buyers will always fight it out to achieve a high value sale for the seller often above the list price: and getting more favorable contract terms such as appraisal gap insurance.

As a side note, a seller doesn’t have to take a full price offer once presented. Our approach to finding value does involve waiting as much as 20 days seeking many offers. This also means the “time to accept deadline” of the offer is removed from our thoughts. It is not relevant. When following this negotiating practice there is only one mission which is proving the value of the home. It is a patient, thoughtful and exact technique.

I hope this explains why buyers are always perfect. It’s a perfect market too. A market where a seller’s list price attracts buyers, or not, and the most eager buyer wins the bid.

The reason these two concepts work so well is once a buyer finally finds their perfect home, they will offer their max just to end their miserably long and frustrating home buying process. They are very exhausted!


Keith Robert Gordon