I have three questions for you:
- Would you like 50 people to come through during your first open house?
- Would you like multiple offers above asking price within the first week of your listing?
- Would you like to get the market price of your home now or wait 90 days for a lowball offer?
This week I listed a beautiful home for $939,000 when the comparable sales said we could probably list it $20K to $40K higher. Had we done that, it would have probably taken three to six months to sell and would have ended up at around a $950,000 sale price.
As a result of our “too low” listing, we had over 60 people through the open house and received multiple offers that were well over asking price and well over a $950,000 sales price. We will certainly get this home in escrow by the weekend.
The banks have known for a long time that listing a house “too low” results in people bidding up to the market price, and often over it. That’s why they always list their foreclosures way below the market price of a regular “fixer.”
The problem is that many sellers are fearful of under-selling their home, but buyers want a good deal at a fair price. By the time they’re bidding on your home they have seen many homes and are very educated on what your property is truly worth. They would rather pick up a quick deal than low ball a stale listing. The result is that you end up at around the same price, but the home sells faster.
Now, here is the part sellers tend to forget: If your house sits on the market for six months, you’ve just made six additional mortgage payments that you might have avoided had you sold it more quickly. In the end, any difference in price, if there even is one, is offset by the time you save, the payments you don’t make, and the stress you avoided. Make sense?
The bottom line: It’s practically impossible to price a house “too low.” The lower it is, the faster it sells, the more offers you get, the higher the bids.