Price correct or start high in a hot market?

Question

Russell Brazil · Answer

Depends on the market, neighborhood etc. Typically in the hotter parts of my market you want to underprice to bring in the most competing bids. Over pricing in the hot neighborhoods here will typically lead to a lower eventual sales price.

Account Closed · Answer

@Chris Kraemer Of course there are risk with listing a property at a price above its value... subsequent multiple price cuts may also send the wrong signal to the buyers. If the property is priced accurately, it should sell at the areas average DOM.

Account Closed · Answer

@Chris Kraemer,

I’m not a real estate agent but I can tell you from my recent FSBO (For Sale By Owner) experience that in any HOT market (Mine was Saint Paul, MN) it’s KEY let the market work for you rather then against you.

By over pricing your home based on the current comps in the area your essentially using the market against you. Many buyers will not even see the property to consider going over their budget to have the winning offer.

Also I’m not a fan of significantly under pricing to FORCE the multiple offer game. I believe if your home is priced right then when you have multiple buyers interested there is a legitmate case of multiple offers and if you or your agent can negoicate then your able to get the higher price point it deserved without waste anyones time.

Good luck.

Jake Hartnett · Answer

Do not overprice your house.

You get the most interest in the first week it hits the market. In this market if a house has been on the market for two weeks I'm worried about what is wrong with it. By that time its at the bottom of everyone's MLS feed and everyone forgets about it. We call it stale bread. After you drop the price a few times why would anyone buy it? It gets cheaper every week. Its like a deflationary economy; don't buy anything because it will be cheaper next week.

This market is so hot you are better off underpricing your property, generating a ton of interest, going into multiple offers and calling highest and best. Once people have already offered at the original low price and you call H&B, fear of loss is now driving their decision making instead of hope of gain. And fear is way more powerful than hope.

You can see this fear/hope in psychological/economic experiments. People will offer way more for an object they are holding in their hand than they will for the same object that they are not holding, because they pony-up to not lose what they feel they already have. After someone has made one offer on a house, they are already invested in it, they feel its theirs, and they are willing to pay more to not lose it.

Chris Kraemer · Answer

Thanks for the great info everyone...seems unanimous..appreciate your insights!

Price correct or start high in a hot market?

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