I respectfully disagree with the seller deriving their own value. Specially in light of the challenges of the market. Most seller's aren't savvy and/or removed enough from their own homes to determine a marketable price.
With regards to this market, regular listings are competing with falling prices on short sales and REO's. To list the home at market value of above it is the wrong approach in 99% of cases. Right now, price just below the market as some have pointed out and market the fact that this is a 'regular' transaction and not an REO.
Finally, Natalia..to answer your final question. Yes...it will bite you if you are pricing the home at or above market value but you're under the impression that it is under. So make sure you're well researched and you practice your listing strategy before the listing presentation.
Tony has given a great, succint answer to your question. Personally, when I sit with a seller to discuss their situation, I will price the home anywhere from 2-5% below the current market value in that area at that time. I do this purposely to generate the traffic to MY seller's home first and not to the competition's homes. Normally when I've applied this method the seller is in a "short sale" situation. By pricing below the MV, I am able to get the house to closing faster which in turn relieves my seller of the stress they're in. You need to approach each situation separately and determine if this particular pricing method is in the best interest of the client. Like Tony asked, please keep us posted. Great question.
Tina Evans, Broker
Luna Realty Group
1) they want to sell quickly - every month the home sits on their books they lose $$ and take up asset mgr's time which is already very busy
2) they want to (hopefully) attract multiple offers, which in turn could drive the price up a bit. The added benefit of this is that maybe they gain some extra traffic because people no longer think the particular house is out of their range. Also, a larger pool of buyers means a greater likelihood of QUALIFIED buyers and they lessen the risk of the deal falling apart because they can choose the most qualified offer.
Now if you wish to utilize this strategy I think as an agent you need to understand your customers' motivation and needs and determine if this strategy fits those needs. If time is of the essence and they need to sell the home I think this is a great strategy. Find out what your customer's "bottom line" is and work off of that. If the home is truly a value within the context of the current market then you could have your choice of offers. If it's not a value at that price then they are going to have a tough time selling anyway and it might not be worth your time listing it. This way there is less fooling around hoping for an offer to come in, and your odds of having to accept an offer that is on shaky terms is reduced
Great question and I'm interested in hearing the feedback on this one
Turn it around on the seller. Let's say you get your first offer. It's good. But another offer is on the way. Its better. You wait. The first buyer gets angry. Why hasnt the offer been accepted. The second buyer never produces, and the first buyer withdraws. There are a lot of choices in the market today. Your seller is 1 in 100. The first buyer just kept looking and found something better. You now have a seller without an offer at all. A low priced home and no bidding war.
If you want to price it low for that intent, it is a game, and you have to be willing to play it. and your sellers do to.
When I go on a listing appointment, I take my clients time frame to sell and what they need to net from it, and create multipule timelines at various price points. We go over all the scenarios and they choose the one they are most comfortable with. It's a lot more work to create these additional timelines, but in the end it allows them to choose the list price they are comfortable with without the feeling that I am only giving them one choice and hope for the best.
I have had great success with this approach and my clients enjoy the fact that I have covered all their bases for them.
Wilkinson and Associates