The Jersey Shore is heating up! Just this week alone, we have encountered 3 bidding wars on properties. While this activity is happening on certain houses, others just seem to sit on the market unnoticed. What is the difference? Marketing is a big part of drawing buyer attention but just as important as marketing is pricing. When it comes to putting a price tag on a house, there are essentially three strategies to consider.
- Copy the retail world: When you go to a department store to buy clothes, where do you inevitably find yourself checking to make sure you are getting a bargain? The sales rack. When a price tag is marked 50% off, you feel a sense of satisfaction. As if you had an advantage over the store by paying $25 instead of $50. In real estate, many buyers are attracted to homes that have had price adjustments. Seeing the asking price lowered, now opens up the house to more buyers that maybe thought they could not afford the home at the original higher price, and gives the buyers a sense of savings, as well. Artificially inflating the price, knowing that an adjustment is coming up in 2 weeks can help spur activity on the property.
- Price on the button: As Realtors®, we have access to recently closed sales and homes that are active and under contract in local markets. Seeing this activity helps us to determine the true value of a home. With a simple market analysis, the house could be priced according to the Realtor® report, and the sellers can be confident that they are taking a “no fuss” approach to their pricing strategy. A property appraisal can also help guide the homeowner to the house’s value, too.
- Below Market Value: Another pricing plan is to artificially price just under the current market value of the house. This can (and we have been witness to) drive a sort of frenzy over the property. In the heat of the competition, the price could go significantly above the asking price, thus proving this strategy’s effect.
Whichever the method you and your Realtor® decide to use to expose the house to the market, current market conditions should always be considered as well as the terms of the offers you have received. Selling a property for more money, although an exciting thought, can cause appraisal issues down the line if your buyer’s offer is subject to financing. Review all possible scenarios with your agent to see which one is the best way to begin your marketing. Happy selling!