How to choose the right pricing strategy based on market value, competition, appraisal risk, and the seller’s timeline
One of the most important responsibilities a real estate professional has is helping a seller properly position a property from the beginning.
Price too high, and the property can sit on the market while buyers begin to wonder why it hasn't sold. Price too low without a strategic reason, and a seller may unnecessarily leave money on the table.
The objective isn't simply to pick a number.
It's to understand the market, understand the seller's objectives and determine the appropriate pricing strategy.
Start With the Evidence
Proper pricing begins with comparable properties.
When evaluating a home, we look for properties that are truly comparable—not simply homes that happen to be nearby.
That means considering factors such as square footage, bedrooms and bathrooms, lot or acreage, construction, condition, improvements, location and other characteristics that affect how buyers compare one property with another.
Sometimes that means beginning within a relatively small geographic area. In rural areas or with unique properties, it may require expanding the search considerably to find meaningful comparisons.
The important point is that not every nearby sale is an equal comparable.
A three-bedroom, one-bath home, for example, doesn't necessarily tell us exactly what a three-bedroom, two-bath home should sell for. Differences have to be identified and considered.
Then Ask a Different Question
Once we understand the property's likely market position, there's another conversation that should take place.
What speed does the seller want to travel at?
I generally think about pricing in three speeds: Slow, Medium and Fast.
Slow: Chasing the Market
A seller may decide to begin above where the current market evidence suggests buyers are responding.
That's a choice—but it has consequences.
The property may take longer to generate serious interest, and the eventual strategy can become a series of price reductions as the seller works back toward the level at which buyers are willing to act.
That's what I call chasing the market.
There are circumstances in which a seller may consciously choose that approach. The important thing is that the decision is made with an understanding of the potential consequences.
Medium: Pricing at the Market
The second approach is to position the property around the value supported by comparable sales, current competition and market conditions.
I think of this as pricing at the market.
The seller isn't intentionally trying to be the most aggressive property in the competitive set, but the property is positioned where the evidence indicates it should be.
This allows the normal marketing and sales process to work without beginning with an asking price that buyers may have difficulty supporting.
Fast: Capturing the Market
The third strategy is more aggressive.
When a seller has a strong reason to move, or when the objective is to generate serious buyer attention early, the property can be positioned aggressively against the other choices buyers currently have.
I call that capturing the market.
That doesn't simply mean "price it cheap."
It means understanding exactly what buyers are comparing the property against and positioning it so that it stands out among those alternatives.
The distinction matters.
A list price shouldn't exist in isolation. Buyers are looking at other properties at the same time, and those properties become part of the decision.
The Appraisal Still Matters
There is another reason disciplined pricing matters, particularly when financing is involved.
Getting a buyer to agree to a price isn't necessarily the end of the valuation question.
A typical financed transaction still has several steps ahead: inspections, negotiations that may result from those inspections, financing requirements and lender appraisal.
If an appraisal doesn't support the contract price, the parties may have another issue to resolve. Depending on the contract and financing, that can mean renegotiating, a buyer contributing additional funds, or potentially the transaction not proceeding.
That's why simply saying, "Maybe someone will pay it," isn't a complete pricing strategy.
The goal should be to create a transaction that has a reasonable path from listing all the way through closing.
What If the Seller Wants to Start High?
There will always be sellers who want to test a higher price.
When that happens, one strategy I use is to discuss potential price reductions before the property ever goes on the market.
Rather than waiting until everyone is frustrated, the seller and agent can establish in advance when they will review the market's response and what actions they may consider if the property isn't generating the expected activity.
The specific timing and amount should depend on the property and market—not an arbitrary universal formula.
The value is in having the conversation early.
Don't Stop at the Sales Price
There's one more number I believe sellers should understand before listing:
their estimated net proceeds.
A seller can focus heavily on the eventual sale price while overlooking the expenses associated with the transaction.
That's why I recommend obtaining a seller net sheet early in the process. It can help estimate items such as mortgage payoff, commissions, taxes, title and closing expenses, and other applicable costs.
The net sheet is an estimate, not a guarantee of final proceeds. But it gives the seller a much clearer financial picture before an offer arrives.
If there's a concern, I'd rather discover it at the beginning of the listing than at the closing table.
Price Is a Strategy, Not Just a Number
The objective of professional pricing isn't to convince a seller to accept the lowest number.
And it isn't to win a listing by suggesting the highest number.
It's to help the seller understand the evidence, the competition, the likely consequences of each strategy and how those choices align with what the seller actually wants to accomplish.
Slow. Medium. Fast.
There isn't one speed for every seller.
The better question is:
What are you trying to accomplish—and which pricing strategy gives you the best path toward that objective?
Sean Sutton is Principal Broker of Tennessee Trust Realty and has more than 20 years of experience in sales, real estate brokerage, leadership and training.