There are a number of philosophies regarding home pricing in this extraordinary time, but we strongly believe in pricing a little under comp value. I’ve been asked why we would suggest that when homes are selling so far over comps that appraisal values become a challenge, so I thought I’d share some thoughts on our process.
Your First Showing is Always Online
Having your home appear in the search results of potential buyers is very important. More interest equals more foot traffic, which leads to more offers. Pricing the home above current comps, even if it will eventually sell for that price, is a bad strategy. It means more time on market, fewer views online, fewer interested buyers, and fewer offers.
More Offers Give You Leverage
“But why would you care, if it’s going to sell for the higher price eventually?” you might ask. It’s because multiple competing offers let you choose who to sell to. When the buyer knows many other people are offering on the home, she is more likely to offer concessions like waiving inspections or appraisals, and she is more likely to offer considerably more over asking. Most often, this results in a sale over the higher listing price, and with a better overall contractual outcome for the seller.
I’ve shown a number of properties during the pandemic where the listing agent or seller priced it over an attractive threshold. We tend to see quite a few, because they are the only listings that linger on market for desperate sellers to view. Inevitably, the question I get from them is “everything is disappearing so quickly, why is this one still here? What is wrong with it?” The answer, of course, is “nothing out of the ordinary, except the price”, but people tend to view poor market performance as an indicator of quality.
So what happens if you price it higher and eventually get that one offer? You have a skeptical buyer, and no leverage. They have no reason to offer inspection concessions, and they are more likely to ask for repairs or closing cost compensation. That is money out of your pocket, driving your eventual net proceeds down.
Of course, there are situations where a catch-all strategy isn’t the best answer, but in general, we’ve found pricing for competition to be the best bet for our sellers. We’ve had quite a few listings recently, and all of them sold over asking with significant concessions after multiple offers. There are a number of ways to effectively price for online views, and we’ve become quite familiar with these strategies operating an online-based brokerage. We’d love to discuss that in more detail regarding your specific home, so don’t hesitate to reach out.