One pricing strategy which is often overlooked is underpricing. Let’s explore this in detail to see if it makes sense as a pricing strategy in selling your home.
There is a time and place for the underpricing strategy.
Underpricing your price on purpose? Sounds crazy, right? You’re trying to fetch more for your home….not less.
But, there is a time and a place for this pricing strategy. A lower asking price doesn’t lock you into a lowball sales price. In fact, underpricing your home in the right circumstances can generate more than one offer and create a sense of urgency among buyers.
Multiple offers? Yup — you just started a bidding war! And as a bonus? You don’t end up with picky buyers asking you to make all these repairs and updates.
However, even in a bidding war situation, don’t get too greedy to the point where you jeopardize the sale. If you set up multiple rounds of bids or continually pit buyers against one another to test how far they’ll go, you could wind up frustrating everyone involved and might have to settle for a lower offer than your original price.
Adjust your price to account for online pricing benchmarks.
Once you nail down your home’s approximate value, small price adjustments may boost your listing’s visibility on the most popular home search websites.
That’s because, on sites like Zillow, buyers narrow down their search results with filters — and the most important filter is price. Buyers set the minimum and maximum price they’re willing to pay in $25,000 or $50,000 benchmarks, and then only view homes that fall into that specific range.
So say list your home as $352,000. Buyers who set their maximum price at $350,000 will never see your listing in their pool of results.
Most buyers will just set their range based on their budget, not thinking about the ins and outs of how the filters work.
So it might be worth setting your price just under the filter threshold to get noticed, considering that 44% of buyers start their home search online, typically through their mobile phones, and 52% of buyers found the home they ended up purchasing online.
This strategy isn’t without its risks. Let’s say you originally priced your home around $355,000. A reduction to the $350,000 price range would require a $5,000 sacrifice, and there’s no guarantee you’ll get that money back in negotiations.
Going to shoot the moon against our advice? Set boundaries in case you need to cut your losses.
Homebuyers weren’t born yesterday — they’ve done their research and pulled comps to get a good idea of the going rate for homes on your block.
If you’ve priced your home way above the competition, you’ll be hard-pressed to book any showings. But, let’s say you’re set on a higher price point and refuse to budge. At the very least, you need a clear plan for how to cut your losses if and when your house sits on the market longer than it should.
Set a strict time frame around it based on how fast homes are selling in that particular neighborhood.
The average time a home spends on the market depends on a variety of local market factors, such as interest rates, property value trends, and home inventory levels.
Get the price right and the rest will fall into place.
As you can see from the overview of the top house pricing strategies, setting the perfect asking price for your home is part art, part science, part psychology — and 100% necessary for a successful home sale.
Here are the four simple steps:
- Understand how your home compares to the competition, aside from the wonderful memories it holds.
- Work with a real estate agent who can be your objective set of eyes and who has their thumb on the pulse of your real estate market.
- Show your home in its best light to back up the list price your house deserves.
- Then watch as your home hits the market and immediately generates buzz in your community, simply because you played.
Some content has been tailored for our specific market conditions.