When we list homes for sale, the biggest issue in the minds of the sellers is how we price the property. Of course, sellers want top dollar for their properties and they often fear asking too little and leaving money "on the table." This is a common concern and something we Realtors work with every day.
Pricing too low, however, is seldom a problem. Sellers usually want more - much more - than the market will bear. Often the seller is concerned when their Realtor suggests a price range because the Realtor, having his or her finger on the pulse of the market, often suggests a price less than the seller was thinking. This happens almost all the time. It's understandable because sellers do want the most they can get for their homes (don't we all?) and fear they'll end up with less profit than they could have gotten had they priced it higher. So, they tend to want to price higher than the market will bear.
There is a solution to the seller's concern when it comes to the fear of pricing their property too low. It's simple, if a property is priced too low for the market, the buyers (and their agents) will see the low price and "jump" on it. What often happens when a low-priced property comes on the market is that buyers start "fighting" over it. In other words, they can get in to a "bidding war." It's like an auction on Ebay. When a product is put on Ebay, its starting price is usually quite low. Buyers see a good deal and start bidding on it. What happens when they start bidding? The price goes up because they start outbidding each other.
The same happens in real estate. If a property is priced too low, buyers and their agents know it. Active buyers are watching the market every day and so are the good Realtors. They "know" the market. And when a property comes on the market and the price is below market value, the "bidding" can start. It's not uncommon for a property to sell for higher than fair market value and even higher than it may have originally, had it been priced just right. And, of course, it could be much higher than had it been priced too high to start with.
Here's the bottom line: the market will let you know very quickly if you "miss the mark" - if the property is priced too high or too low. If it's priced too high, there will be little, if any, buyer activity. If it's too low, multiple offers (a bidding war) could result. So, when my sellers fear pricing too low, I remind them that the market will "protect" their value by getting us multiple offers if we're too low. If, however, we get their property on the market and we don't receive considerable activity (buyer showings and one or more offers), then we are not priced too low - maybe just right, or maybe even too high and may need to adjust the price closer to market value. The market is a very accurate measuring stick when it comes to pricing a property for sale.
Of course, whenever we work with sellers, we educate them on the current market and how important it is to price right. Together, we evaluate market conditions and their competition to ensure we price right. Once we've been on the market for a short while and we have a chance to see what the market is "telling us," we then take the appropriate steps to respond to the market. This ensures we are positioned in the best possible way for a timely, top dollar sale.
If you have any questions on pricing, please feel free to give us a call at (916) 241-8000.