@James McGovern pricing strategy when professionally doing flips is NOT the traditional home-owner method of list at MAX what think people will buy at, then discount, discount, discount until someone jumps in.
When you enter a deal, if your professional, you utilize a MAO (Maximum Allowable Offer).
As a person who's done hundreds of flip's; when comes time to market for sale we again come to it equipped with a MiAO (Minimum Allowable Offer).
We review market comp's vs our MiAO, and list at EITHER our MiAO or somewhere between that an 50% the distance to CMA.
Yes, we UNDER price the market each-and-every-time. And we NEVER leave $ on the table.
Now how can this be true? Because the simple universal fact that a property is ONLY worth what the market is willing to pay for it. Period end of story.
Our method is designed for TIME EFFICENCY plus Maximum Emotional Value.
By marketing at a best in market offering, we drive emotional power, URGENCY, which leads to not only multiple offers but EMOTIONAL deal chasing type offers, FOMO.
This lends to gain our best Terms on a sale, as well as best price.
Now key to this is a person has to be skilled and experienced in running such a "circus" of multiple offers and how to juggle things, drive home the URGENCY to act, counter-offers and what not.
And with this the market will drive price UP too FMV.
And guess what, if you get a grand total of 2 offers, barely moving the needle up in price, no, the hoped for 120% of list price was NOT "FMV" then was it. No.
Because if your at a 10, 15, 20% discount of "FMV" the market will flip the heck out. On open day you will have showings stacked and jamb packed.
My last most recent one, we lead with 72hrs of coming soon status. In that we filled the first 2 days of showings with up to 3 over-lapping showing times, for the first 2 days solid.
We had communication of offers in process the day before showing opened.
On first day of showings of course we got all the dumb agent questions, which I ignore and I gave my templated response that as listed it's a great deal for a buyer and they must act fast or miss out, and I suggest all put there best foot forward and may the odd's ever be in their favor.
24hrs into showings the first PA land's.
I send out a notice for all agent's we will be accepting offers until ___ day and __ time, so please submit their highest and best by this time to assure they are fairly considered. If any have a situation otherwise contact me at ___ to discuss.
By that time we had low-balls, at asking, and 3 escalation offers.
We accepted an escalation offer with great terms, and closed 35 days later at 115% of list price.
Now keep in mind we listed at 105% of MiAO.
Our Miao is our MINIMUM acceptable sale that has MINIMUM acceptable margins on things. No, it's not a big payday, it's not a "get-rich" profit. It's an acceptable "aaah, ok, we can survive on that" profit. And everything else is just a GIFT, icing on the cake.
Too many think flipping is about hitting Grand-slam after Grand-slam. And they end up loosing $ chasing Grand-slams.
It's about pricing for base hit's, leaving the door open for a home-run, and taking it as they come.
And VOLUME, repeatability, playing the averages.
Pricing UP to discount down is giving away $ via TIME LOSS. Time is $, literally. So stop wasting $ via wasting time.