Coastline Realty, Inc.
I am not an agent or lender, just another buyer.
I think it is tremendous advantage to the listing agent to list below price. It gets the house sold fast, so the agent can focus on other projects.
You also have advantages like multiple offers, bidding wars, qualified buyers, etc.. but the agent also gains.
Example: I would take $2000 for 30 days of work than $2200 for 60 days of work.
If you read that book especially the part on real estate agents, you will understand what I am referring to!
In todayâ€™s buyerâ€™s market, buyers can go online and see virtually all the homes for sale in an area along with their asking price, photos, and information. For the same reason you wonâ€™t pay $22 for a twenty dollar bill, but you will pay $19 for one, they look for the good deals and ignore the overpriced ones. If you price below the pack you will likely get more interest, showings and offers. We find that when we price houses this way, we are getting multiple offers and selling close to or even above the asking price while the other homes just sit (unsold in a declining market) until their price is reduced. Unfortunately, by then they have the stigma of being stale merchandise and ultimately sell for a lot less than if they were more aggressively priced in the first place.
On the other hand, all this lower pricing continues to put downward pressure on the real estate market and perpetuates lower and lower home prices. I wonder if a year from now all the people who answered this question will be singing the same tune.
At some point, sellers will say enough is enough. When that time comes we will finally level out and see home prices rise instead of continue the downward spiral.
In this market you should price it below the comps. You should be 5 - 10 % below the comps. First you neeed to get the buyers attention which is priced right. Then you need to give them good pictures & descriptions. That's how you get them in the home. Then the condition needs to be right. that's how you get offers. There is more to it but these are the basics. The Reo properties are usually priced under & they can receive multiple offers. When people know there is or can be multiple offers & they like the property, they have a tendency of raising their offer. My last Reo offer was almost 22% over list price & cash & it still wasn't high enough.
When you price it at comps or higher, you loose potential buyers that are looking for bargains. If you don't get showings, you can't get offers. Then the comps get lower & you lower your price but not low enough & you still don't get showings since there are other properties that are lower now. You are chasing a downward trend. If you had it priced right to begin with, you would of sold it sooner & for more money.
I had a home I listed that sold above asking price last month. I have a closing tomorrow on another listing that is selling at asking price.
The responses for this question are overwhelming and as I am sure after you have read them you are getting the idea, lower than comps=more interest.
There is one catch if it is to low and the buyer needs to use FHA financing the home may not appraise and the deal may fall apart. In a perfect world, 5-10% below will get you back in the middle of the comps!
Great Questions and Great Answers!
For more seller and buyer tips: http://www.RochesterHomeLocator.com
First, how much "lower than the comps"? 5%? 10%? 20%? Something a bit below the comps--say 5% or so--is likely to produce more interest, more offers, and yet result in a net to the seller close to (or sometimes, though not often) equal to what a home priced in the middle of the comps might have brought.
But if you're talking about, say, 20% below comps, you likely will net less. Also, you may actually not get more interest or offers. First, a lot of folks will figure there's something wrong with the house. Second, buyers look in "bands" or "ranges." Maybe someone will be looking in the $175,000-$200,000 range. Price your home at $149,000, and you'll miss those buyers entirely. It'll be a different type of buyer who likely doesn't value your home the same way someone from a more expensive band would.
You asked specifically what the advantages are to a real estate agent pricing the home lower than the comps. The advantage to the agent is a quick sale and, thus, a quicker commission with fewer marketing expenses.
Hope that helps.
Specializing in Palm Beach County, Florida
Not only is it an advantage but pricing below the comps is the more correct number than the comps. We are still in a declining market so using comps to price your listing you are behind the curve. Recently sold homes were under contract at a price 60-90-120 days ago so in a declining market you should be somewhat below those numbers.
A personal example; We put our home on the market it was in super excellent condition freshly painted in & out landscape top notch model home ready. We priced it a little below the market price based on an apprasial and 2 agent comps. Listed the home in the MLS made it easy for agents to show had 12 showings in 9 days. Signed a contract on the 10th day and closed 25 days later. Price came in about $12,000 less than what we wanted we spent $3,000 into getting it ready and that was OK because I knew we could make it up.
On the Buying side we searched every "short sale" & "foreclosure" in our area in price ranges twice as much as we could afford. The idea was to negoiate the price down to what we were motgage approved to buy. After 2 weeks we had a bank approval on a short sale where the bank took $325,000 less than what was owed on the house. The apprasial came in even $100,000 higher. We got a big deal on a move-in ready lake front new construction home with all the bells&whistles. Thank you,
Bill Carey, Broker/Realtor
Certified Short Sale Seller Specialist
Charlotte's Premier Real Estate Company
Well certainly pricing a home lower than the comps will give a seller a leg up on the competition provided all things are equal..which means is the view and upgrades in the home comparable to the comps being used. Not all homes are created equal which makes it challenging when using the comps--it is important to ensure that the things that are important to buyers like the condition of the home, upgrades and views match up. Provided all things are equal to the "comps" then pricing it below those comps will definitely make it stand out in a buyers mind.
Marketing your home lower than the comps in the area will certainly give you an edge over the competition. There are plenty of ways to lose money in a real estate transaction and carrying cost is a big one. I am not in your market area but if it were me I would rather sell my home quicker than pay the extra mortgage payments to get a higher price. You will have to evaluate your situation. Are you living in the home while it is up for sale etc.
Good luck to you!
Unwavering Commitment to Service
I see no advantages to ever under pricing a home unless there is a need to sell quickly and there is an advantage for the seller to do so. Perhaps you are buying another home and need to sell quickly. you question pertains to a Realtor under pricing a home. It is more important that a home is priced correctly. The market will dictate the how well priced the home may be.
I'd like to focus on the disadvantages. That would be if the home is worth more, has location and is in very good condition, I would suggest pricing it right. Anyone can sell a home if it is priced too low. The outcome is that other sellers will follow suit and this brings the value down in a subdivision or given area. Please let me know if you need any help selecting a realtor in your area. I have extensive resources to help you pick the top broker/agent in any given area and have referred dozens of buyers and sellers outside my area with great success. Good luck in your endeavor.
Frank Dolski MBA, ABR, e-PRO
CARTUS Certified Relocation Specialist
Previews Luxury Home Specialist
Coldwell Banker Hearthside Realtors
The "wiggle room" that so many people try to build into their asking price, in my opinion, is not needed and delays the inevitable. If the marketing is sufficient to attract real Buyers and it is priced right ---- they'll pay for it.
There is short article I wrote which addresses length of time on the market in your location. Check it out. The link should be included in this reply.
I am not a Realtor but I am a realist. The property market is filled with distressed properties (short sales and foreclosures) and overpriced properties that have sat on the market for too long.On top of that lenders are aggressively denying loans at every opportunity and also we are in a time of a depressed and uncertain economy. Therefore we have high supply and limited demand. If you want to sell the property price it aggressively. If it is undervalued, you will see aggressive bids on the property.
Cornerstone Lending Inc
720 Second St Pike Suite 104
Southampton Pa 18966
Office 215 953 0800
Fax 215 953 1706
Cell 267 992 7276
Voted Best of Bucks 2010
The advantages are that it will attract more buyers and agents that will come to see your house. It will show your willingness to aggressively market your house and lastly it will likely be why your house sells and the others on your street sit and generate long times on the market unsold.
If you have all the time in the world to sell, then don't price aggressively and wait for the one buyer who just has to have your house.