I am finding that investors are reaching for the last breaths of the foreclosure world, and when you give buyers a sense that they are getting a deal, the buying frenzy begins. I am not sure that this strategy works as well on regular sales, as I feel that buyers, instead of feeling like they are getting a deal, may feel that there is something wrong with the property.
So in summary, it works great when there is a large pool of cash ready buyers and a small inventory, when a sense of value can clearly be identified.
Lake Tahoe Realtor - Coldwell Banker Tahoe City
530 448 6633
I hate this practice because it confuses buyers as to what is possible, and what is not...it is incredibly misleading. And despite Ron's comments below, I believe this is a strategy that listing agents employ as opposed to the sellers.
What if an agent recommends significantly under pricing the sellerâ€™s home and the strategy does backfire; has the agent done their job then?
Of all of the Tahoe home sellerâ€™s that Iâ€™ve worked with, none have ever suggested that we list their home for much less than my Comparative Market Annalysis value range would suggest. With that said; Iâ€™ve also not been a fan of â€œtesting the marketâ€ with a higher asking price than the CMA justifies which only ends up producing a stail listing and a frustrated seller. I also agree with Mackâ€™s statement that sometimes when an agent satisfies the sellerâ€™s request of â€œtesting the marketâ€ with a higher price, usually the reason agents get fired because the overpriced home did not sell and I might add; only to see another agent later list the same home for a lesser amount and have it finally sell.
The thing about a rising market is that agents don't all adjust at the same time. When an agent finally gets a listing that they've been working on for several months, they're usually not pushing the seller to "list higher."
Appraisers have a similar problem. They're dealing with six-month-old comps, and finding it hard to adjust to the current market where prices have gone up.
So, I'm not blaming agents for anything, although maybe we can get a little more aggressive with our pricing in a hot market, especially when the recent actives have gone under contract with multiple bids?
I think that this technique works very well in the sub $700K price range in most Tahoe markets but as soon as you get above $700K there are fewer buyers and I'm not sure that this technique would work as well.
Dave Westall, Realtor
Tahoe Riverfront Realty, Inc.
CA DRE# 01796995