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On the advice of our real estate agent, we have listed our home at a price that is at the lower-middle part of the range for our area. The agent felt that the lower price would draw in more people, even though it severely limited our ability to negotiate down to the bottom price we would accept for the house. I wanted to list the house at a higher price, but still within the acceptable range. I felt we would have gotten the same amount of traffic, but we would have been able to give a potential buyer a larger discount and would have kept the momentum for negotiations going for a longer period.
The higher listing price would still make our home comparable and competitive with other offerings in the area. We are not talking here about overpricing our home because we have an inflated view of its worth. Our bottom price would still be respectable and fair for any buyer shopping in the area.
I believe we recently lost a strong potential buyer because the gap between the listing price and our bottom price is too narrow. We had to end negotiations prematurely because we reached our bottom price fairly quickly. I believe that a potential buyer 1) perceives the house has a higher value if it is listed at a higher price within an acceptable range, 2) may make a higher initial offer because of the higher listing price, and 3) wants to receive a respectable discount from the listing price in order to feel he/she has gotten a good deal. Because of the tight range between listing and bottom price, we have little "wiggle room" and it is, thus, difficult to offer the buyer a decent discount.
I would like some reactions to this. We live in an affluent area on Long Island, NY, where potential buyers are likely to be less affected by the recession than others. However, this pricing issue may be relevant to other parts of the country as well.
Last edited by longislander2; 08-24-2012 at 08:52 AM..
On the advice of our real estate agent,
we have listed our home at a price that is at the lower end of the range for our area.
The bottom line (price) at the end of the process is what matters.
If you actually want to sell and to do so in reasonably short time... don't play games getting to that point.
Don't artificially hinder the process.
Quote:
...even though it severely limited our ability to negotiate down to the bottom price we would accept for the house. I wanted to list the house at a higher price, but still within the acceptable range. I felt we would have gotten the same amount of traffic, but we would have been able to give a potential buyer a larger discount and would have kept the momentum for negotiations going for a longer period.
^^examples of game playing and artificial hindrances
You are only talking about this one buyer. Just move on. What matters ultimately is the value of the house and any offers should be based on that. A higher price won't help you if it makes the house over priced and can even be discouraging. If you have your house listed at a fair market value I would just wait for the next buyer.
The bottom line (price) at the end of the process is what matters.
If you actually want to sell and to do so in reasonably short time... don't play games getting to that point.
Don't artificially hinder the process.
^^examples of game playing and artificial hindrances
I do not agree with that. Unless the market is completely a sellers market and there are multiple offers for the same properties in the area then a Buyer expects that a Seller is going to come off his list price.
It is similar to going to a car dealership and paying sticker price...nobody with a brain does it. Everyone asks more than they expect to receive...unless its a sellers market you have to inflate it.
The bottom line (price) at the end of the process is what matters.
If you actually want to sell and to do so in reasonably short time... don't play games getting to that point.
Don't artificially hinder the process.
^^examples of game playing and artificial hindrances
Thanks for your thoughts. Nope, we didn't play games. We could have extended negotiations by bringing our price down in very small increments, but I felt that would have been kind of silly and unfair to the buyers. As a result, we reached our bottom price fairly quickly. We were also willing to make other non-price concessions to help the buyers.
I am also not suggesting we raise the price now, if that's what you mean by "playing games." However, if we had priced the house higher in the first place, I don't see how this would have been "playing games." Buyers searching on our area's multiple listing site would still have found our home because -- even at the higher amount -- it would have shown up within the site's available search parameters.
If anything, I believe the tight gap between listing price and bottom price hindered the process and gave the buyers a mistaken impression that they could have the house for less than we were willing to sell it for . . . or less than it is worth. The reason I say this is that the discount between listing and bottom price for our home is currently less than the average for the area, perhaps creating an impression in buyers' minds that they might be overpaying. If we had priced the home higher (again, still within a reasonable range for the market), we could have come closer to that average discount.
You are only talking about this one buyer. Just move on. What matters ultimately is the value of the house and any offers should be based on that. A higher price won't help you if it makes the house over priced and can even be discouraging. If you have your house listed at a fair market value I would just wait for the next buyer.
Thanks for your advice. We are absolutely moving on and anticipate that the right buyer will come along if the home is well-marketed. If anything, the recent offer and some strong sales in the area have made us even more confident about the market value of our home.
A strong buyer will consider value vs. the market, and not discount off list price.
The first is relevant, the 2nd? Not so much.
Thanks, Mike. It may be different in North Carolina, but here in NY, it's not unusual for buyers to ask for -- and get, on some homes -- discounts that can go as high as 10%-20%, even though the listing prices are perceived as being within market value.
You either get a reasonable buyer or you don't. One that is only interested in how much off of list is unreasonable. One that knows the value of the house compared to comps and therefore doesn't matter what price the house started at is reasonable.
As pointed out above, the rest is just games.
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