Home Selling in Hopkinton>Question Details

Lori, Both Buyer and Seller in Massachusetts

Better to price house low or slightly above what you expect to get?

Asked by Lori, Massachusetts Thu Jan 3, 2008

Is it better to price the home as what you think it will sell for ultimately (based on comparables), or better to price it slightly above that, knowing most buyers will offer less than what you list it for anyways, no matter whether the price is correct or not? The latter leaves room for negotiation, making the buyer feel they are getting more of a deal, possibly?

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I agree with Jim. I disagree with Susan. Pricing slightly below market is neither playing a game, nor is it condescending. When a seller hires me to market their property, get them the best price, and represent their interests, I do so. While I fully disclose any and all info about the property to any prospective buyer, and I am always fair and honest with prospective buyers, my job is to get the best deal for the seller. Buyers respond and the market speaks. I advise my sellers to listen to the market. When a property is overpriced, it lacks showings and buyer interest. That is the market speaking. When a property is aggressively priced, many fence sitters and prospective buyers take a proactive position. Again, it is the market that is speaking.

Auctions, whether they be traditional offline for housing, art, antiques, etc., or online like eBay, are based upon allowing buyers to determine the value based upon the price they are willing to pay.

My comment that follows is based upon the collective expressions and thoughts of a multitude of buyers in marketplace. In a market with much inventory, buyers are confident that the property of interest to them will be there next week, the week after, or next month. They don’t anticipate the property of interest to disappear, but even if it does, there are plenty more on the market.

The average buyer in the marketplace of high inventory has no sense of urgency. Pricing at market doesn’t make you stand out. Pricing slightly below market does.

An employer interviewing to fill a position has no sense of urgency when 5 candidates are nearly equal. If the employer waits a month, and makes an offer to a candidate who has gone elsewhere, so what? The employer moves to one of the other equally qualified 4. If the employer meets a candidate who WOWs them, the employer is motivated to act now. Similarly, buyer react to a WOW factor.

When I work for a seller, I advise based upon how the market will respond, and based upon what will deliver the best results for my seller. While there might be a buyer who “leaves” because they hear the words “bidding war” either because they don’t want to bid up, or they are offended as a poster mentioned here, my counsel to sellers is predicated upon how the majority of buyers respond. In a competitive marketplace, you have to shine brighter to capture attention and deliver a WOW factor. Value is what makes a WOW factor in real estate. I advise serious sellers to price slightly below market. The market will push the price up, if warranted. Likewise, the market pushes prices down on overpriced properties. The downward push negatively impacts the bottom line more so than simply pricing right or under market to begin with. The stigma of a long days on market, and reduced prices indicating market rejection have more downward push than simply going in lower to begin with.

Bottom line: Price at market or slightly below. Don't price over with the hope of leaivng room for negotiation. It will hurt you, not help you.
2 votes Thank Flag Link Fri Jan 4, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
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In today’s market, pricing something to sell is all you need to do. Your agent knows what things have been selling for and how to navigate through all the necessary hoops to close an escrow. It is not uncommon for multiple bids to take place especially if everything is priced right and shows well. In addition, your agent will see to it that the purchaser qualifies and can perform. Many good offers cannot close an escrow. That is why it is not wise to base everything on the sales price alone. Consequently you will maximize your gain by following the right procedures. In the end, you will get your value and your agent can see to it that it happens. Remember, the buyer wants to feel good about the purchase as much as you want to feel good about the sale. A good agent knows this and sees to it that you are protected and that all are treated fairly.
1 vote Thank Flag Link Sat Mar 6, 2010
If you price your home slightly below what you expect to get, then you may even get higher than asking price. That is what we did with our condo and we sold above asking price, closed exactly 1 month ago. The problem with thinking, "Buyers will underbid by 20% so I will list 20% higher" is that you start out knowing that you are asking more that what you think you should get for your home... and buyers may not even look at your home, or they may look at the price and feel that your home for that price is not a good value and move on. There are so many homes on the market right now to move on to. Good luck.
1 vote Thank Flag Link Fri Jan 4, 2008
My philosophy is price it right and negotiate tight. Buyers are savvy today. They know a good deal when they see it. Most buyers will respect the fact that you were realistic from the get go and not play games with you when negotiating.
1 vote Thank Flag Link Fri Jan 4, 2008
Low is working very well for sellers in my area. I'll use Don's example as a basis for my example:

Instead of $403K or $408K the seller prices it at $400K from the get go. All the buyers ignore the other competing listings, they offer on the $400K house instead. Then they start to overbid as they are informed that it is a "multiple offer situation" . This brings on the auction fever in the buyers. With overbids, the price gets pushed back up to ... or even over the market value.
1 vote Thank Flag Link Fri Jan 4, 2008
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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John is correct. It is a buyers market right now and buyers can compare homes very easily. They will look at the homes that are well priced. In this market that means being priced below comparable homes or at least priced the same. I do not think this is the market to try and price a home higher in the hopes of getting an offer at your price the danger is that you will be chasing the market as prices come down and up up with less in the end. Talk to a good real estate agent in your area and ask them to price your home to sell.

And remember that pricing is relative, you may get less than you expect on your home when you sell it but you will likely get the next home you purchase for less. Don't get caught in the trap of thinking you will get top dollar for your home and then turn around and buy a home at a reduced price. The longer it takes to sell your home the less you will end up with.

Best wishes in your move!
1 vote Thank Flag Link Thu Jan 3, 2008
I think Don's answer was right on - pricing on the lower range of the competition but still above expected.
Except as a buyer I consider 403k, 405k, 408k and 412k to be the same price. If the properties were essentially equal I'd make the same offer to the one i liked best. If refused I'd make the same offer to #2
0 votes Thank Flag Link Fri Jul 2, 2010
Jims answer is the reason buyers dont trust agents, and are fence sitting right now. They are tired of being forced to play games. Any broker who talks about bidding wars in front of me makes me leave the house even if I like it because it is clear they want to play condescending games, and there is too much inventory on the market right now for those antics.

Buyers expect to pay pre bubble prices which would be affordable with the conventional loans being offered right now. If your house is priced using these guidelines, it will sell.
0 votes Thank Flag Link Fri Jan 4, 2008
John's answer is right on target. However, I understand your concern. I suggest the following approach: Determine from the comps (the solds) what your home is likely to sell for. Then look at active comps. See how they're priced. If possible, pick a figure that's at the low end of the actives, but perhaps slightly above your anticipated sales amount. That way, your house will be priced competitively, but you'll still have a bit of leeway to negotiate.

Example: Recent "solds" suggest your house will actually sell for $400,000. Four comparable houses are currently on the market: $405,000, $410,000, $412,000, and $415,000. I'd suggest you consider pricing it somewhere between $403,000 and $408,000. The lower number makes you the least expensive; the higher number gives you more wiggle room but still puts you at the lower end of the range. Other factors (not covered here) involve any special characteristics of your home and your eagerness to sell.

Hope that helps.
0 votes Thank Flag Link Thu Jan 3, 2008
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
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it is a very price sensitive market. you want to avoid pricing your home to make your competition look better. it is absolutely better to price your home right where it should be. if it is priced well it will sell quickly and very close to asking. buyers set the market value not sellers or realtors, realtors advise you as to a list price which will attract buyers. buyers are looking at everything on the market and not in just one town, they know a good value when they see it and will act upon it, if they are serious.

John
0 votes Thank Flag Link Thu Jan 3, 2008
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