A popular real estate pricing strategy is to underprice a home to obtain multiple offers and a bidding war. Pricing your home 3 – 5% below market value typically results in the home selling at a higher price than if originally priced at fair market value. According to Wikipedia: Herd mentality, or mob mentality, describes how people are influenced by their peers to adopt certain behaviors, follow trends, and/or purchase items. In today’s market, buyers are more confident about purchasing their home when someone else desires the same one. Pricing your property on the lower end of the value range stimulates interest among buyers. As a result, herd mentality takes over.
When listing your Los Angeles home for sale, you may be tempted to try asking a high price. To see if you can get it. Indeed, the worst thing a seller can do in today’s real estate climate is to overprice their home. You don’t need to price your home with room to negotiate. In today’s market, you should be negotiating up, not down. Experienced Realtors advise that pricing your home appropriately from the beginning is critical. Suppose you want to sell quickly and at the highest price. Studies show that overpricing your home and then dropping the price after languishing on the market usually results in a lower price than if priced correctly from the onset. The longer a home is on the market (days on the market) typically equals a lower selling price.
As most buyers search for homes online, “round numbers” appear in their online searches. Most buyers have a specific price range. For example, they want a three-bedroom home in a good school district priced under $850,000. When their search criteria cuts off at $850,000, and their dream home comes on the market priced at $869,000, they may not be aware of this listing.
And what about those crazy numbers? Why price your home at $882,654? The thought process behind this pricing strategy is that the buyer will believe the seller and their agent arrived at this price through some specific calculation. And that the pricing is very precise. Most buyers I work with see this price strategy as a reflection of the sellers’ eccentricity.
Want help pricing your home? Allow Phyllis to provide you with a winning strategy. She’s just a phone call away 818.790.7325
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