Strategies for setting a home’s selling price
NEW YORK – Sept. 3, 2014 – Most real estate agents agree that convincing sellers to price their home appropriately is a struggle.
Some clients ask for less in hopes that it will set off a bidding war that will actually fetch them more – but property professionals say this tactic is a gamble. Redfin's Rebecca Walter warns that a low asking price will not necessary sway buyers to offer more money, since many of them want to compete on other terms, such as paying all cash or foregoing the inspection to accelerate the deal.
Other sellers, unable to separate their emotions from reality, overprice their home – and then they watch it languish on the market, only to eventually sell for less than they hoped.
According to College of William & Mary real estate and finance professor Michael Seiler, the asking price for a home is a psychological move as well as a negotiating strategy.
"When you set a list price, you're sending a signal to the market," Seiler says.
Research suggests that an exact figure like $795,475 gives the impression that the price is less negotiable than a round number such as $800,000; and pricing at $999,900 rather than $1 million makes the lower number seem much cheaper.
Even if a home sells for more than the asking price, the initial lower value can make buyers feel like they came out ahead.
"The goal is to make it stick in your head that you're getting a bargain," Seiler says. "It's the way our brain looks at numbers."
Big gaps between the asking and sale price are not that common, experts say, and tend to occur most frequently when no comparable sales data is available for a unique property. On the other hand, comps matter less when availability in a hot neighborhood is unusually low.
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