We had a large Single Family Home on the market for a while and were not getting the right interest in the house. It's a rapidly appreciating area (One of the top ten fastest in the country!) so it's tough to gauge ARV. Finally before the holidays we had a contract at $504k (and a back up at $450k). But the buyer quickly backed out. We reanalyzed the market and adjusted the price. Up. By one hundred thousand dollars - A risky move, but the 600k buyers are more serious, and there were few high end SFH's in the area.
In 48 hours we had a full price offer.
I'm now convinced we could have pushed it higher. But no complaints.
One key to getting the high price: I offered above market sales commission: 7% total - 4 to the buyer's agent and 3 to mine. But this bonus commission was only valid above a certain price point. This move sealed the deal!
We closed yesterday and everyone is thrilled. It took way to long to renovate and sell, but the new pricing strategy was a whole lot of icing and an already sweet cake!
What clever tactics have you used to move your rentals or flips?
@Joshua Burke That happens a lot in southern California! I think it gets people that were thinking about the house to get off the fence for fear of the price continuing upwards.
I can see where a buyer can look at a house that is priced below market and wonder why. What is wrong with this house that I do not see that makes it less valuable then the one next door (or on the next block, whatever)? The unknown can be very scary to many folks.
Ha! that's great. I have had a similar experience with a rental unit- very few people coming to see it, none of them qualified. I soon figured out the folks that I was looking for weren't showing up because they just weren't looking in that price range.
So I got a better tenant and made more money ( not 100k though, sheesh...)
Actually, raising a price after significant market exposure is a good tactic, if you can justify the price, at most any price level.
Realtors are usually aware of listings, they can see the days on the market, after awhile it may be assumed the are issues to properties, one it's over priced or there are other issues keeping a buyer away, like condition. So under such assumptions activity drops off.
Raising the price into another value range does two things. One, it indicats that issues have been address, perhaps repairs or updating has been done. The other is that the new value range comes to the attention of a different buyer's market, those seeking homes above a certain value and below a higher value. Moving an asking price from $79,900 to $84,900 may get the attention of buyers seeking a home from 80K to 95K for example.
The higher the value the more you might move the price, I'd say moving up 100K was bold even at that value range but it probably indicated that some issue had been cured and opened to marketing door again. Nice job! :)
Wow! That's awesome! Do you think that's just in certain markets? I'm in Texas, which is hot right now, but I just can't imagine that a 20% increase in price here would actually help a sale.
Wow, nice payday! I've done that a few times when I was doing high volume, its funny how raising the price helps it sale. I never did $100k, though, that's fantastic.
Hi again everyone,
So sorry for the delayed reply. This was a great deal for us, but still a risky move. I can't say it would work again or anywhere else, but what we will do again (and what should work anywhere) is the commission incentives. Essentially we got the buyer's agent on our team by offering bonus commission. This made them work extra hard to close the deal. Also the bonus commission was only valid above a certain price point, so that was also key. Good luck on your next deal!
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