Edgewood, WA Real Estate Blog

What do you do if you don’t know the “correct” listing price for your home?

In yesterday’s market a lot of agents picked a number that would satisfy the seller and wait for the market to catch up. That technique appeared to have some success when prices were escalating 15% a year or more. I say appeared because although a home might have sold, it may not have been sold at the highest price possible.

Another technique that seems to have had a lot of agent and seller following, particularly for higher priced properties located in south Puget Sound, is to intentionally overprice a property and then gradually lower it over time. This isn’t a matter of making a mistake with initial pricing. It’s an intentional strategy. Kind of like a reverse auction. Just keep lowering the price plumbing for the bottom until someone bites.

Problems with this strategy include:

1. Becoming shopworn is the obvious first issue. As a property languishes on the market, agents (and buyers) begin to wonder what’s wrong with the property – why hasn’t it sold?
2. Good agents will check the property history right off. Often you can see what’s going on, especially if the listing agent is one known to use this technique. Why make an offer in the face of today’s listed price when you know it will be lower tomorrow?
3. The power of scarcity has been sacrificed . If you know you be able to buy tomorrow, there’s no hurry today (even at the same price). This is a far different from a scenario from where there’s only one, everyone wants it, and you know it will be quickly sold.
4. Homes get maximum exposure within the first couple of weeks of hitting the market. There’s a pent up pool of buyers who’ve been unable to satisfy their requirements with existing homes on the market. These buyers are the “parade“. Once the parade has passed everyone goes home… and getting them back is damn near impossible. From here on it’s just new buyers entering the market. Getting the parade back requires a really dramatic price drop.
5. Emotional cost to a seller increases dramatically over time.
   • Where’s the bottom on pricing?
   • As Barb Swartz would say (yeah, I took the course), “the way you live in a home and the way you sell it are two different things.” In other words, no one can live like this for long.

Is this to say anytime you have to adjust a price it’s a screw-up that could have been avoided? No, I’m not saying that. The market changes, and although perfect pricing is the goal, it’s not always possible. But you can correct it before the parade goes home.