No matter what price range or neighborhood your real estate is in, pricing is critical to affect a quick sale. Often sellers do not want to accept that their property may not be worth what their agent is telling them so will cajole the agent to “just try” a higher price than originally recommended. This is a dangerous practice.
When potential buyers see your overpriced property they will dismiss it as overpriced. Not everyone loves to negotiate. So, contrary to popular belief, a buyer may choose to walk away rather than making an offer lower than the asking price. This is especially true if they have lost other properties due to competition.
Even in our brisk real estate market we are carrying listings where the listing agent got a little too aggressive. In many areas we have been watching prices come down as sellers and their agents begin to see the lack of interest at the advertised price. A new study reveals that taking a lesson from retailers may help.
Set the asking price just below a round number — that’s the best technique for pricing a home for sale, according to new research published in the Journal of Housing Research. Researchers found buyers are more drawn to a house priced “just below” at, say, $199,000 than to a house priced at a rounded number like $200,000.
“Our study suggests that by using the just below pricing strategy sellers can price their home slightly higher without driving away potential buyers,” said Eli Beracha, one of the study’s authors. “As a result, they end up selling their house for more.”
Indeed, researchers found that such a “just below” pricing strategy yields a selling price that is about 2.5 to 3 percent higher — or $5,000 to $6,000 more — on a $200,000 house compared with a rounded pricing listing strategy. Still, rounded priced homes usually have a shorter time on the market and a lower discount relative to listing price, researchers found.
Yet, “sellers’ ability to set higher listing prices for properties using a ‘just below’ pricing strategy outweighs the lower discount and shorter time on the market associated with similar rounded priced strategy homes,” researchers found.
“We tested the age-old debate concerning the best technique to price a home when listing it for sale,” Michael Seiler said. “We find that using a price just below a round number works best, particularly in connection to the left-most digit in the price. So, $199,000 works better than $200,000.”
If you are becoming frustrated that your home or other real estate is not selling schedule a meeting with your Realtor to discuss why. There is a good chance it is something other than price but a simple change in presentation may be the answer you are looking for.
Trust an expert…call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.
Kim Cooper is a real estate broker and the spokesman for the Coeur d’Alene Association of Realtors. Kim and the Association invite your feedback and input for this column. You may contact them by writing to the Coeur d’Alene Association of Realtors, 409 W. Neider, Coeur d’Alene, ID 83815 or by calling (208) 667-0664.