Some people believe that the only way to sell a house is to set its price at the prevailing market rates. This is usually done after conducting a comparative market analysis (CMA) to find out how much similar properties are going for. This is a good approach, but it doesn't mean that it is the only way to go.
Pricing is a science that should take into consideration different factors such as the state of the market (demand versus supply) and the buyer's emotions. In fact, there is evidence that listing a property at a slightly higher price may make it sell fast and at a slightly higher price. Here are two explanations for this interesting phenomenon:
People don't rely entirely on logic when buying a house; emotion has a part to play too. For example, confirmation bias is an interesting phenomenon where a buyer looks (consciously or unconsciously) for facts to support a decision they have already made. This phenomenon can play to your advantage if you have set your price slightly above comparable properties in the area.
Take an example where bedroom condos are listed for a maximum of $300,000 in your area, and you decide to list yours at $310,000. Potential buyers interested in your property may start looking for reasons to justify the extra 10%. After all, they may reason, you wouldn't increase the price without a compelling reason. Unless you are selling a rundown property, the buyers are likely to find the confirmation for the high price. For example, they may learn that the roof is new or the solar panel reduces the house's energy costs.
Home buyers will always negotiate for a lower price, whether the initial price is moderate or a little bit high. Since negotiation is a give-and-and take process, it's possible that you will reduce the price a little bit whether you start high or low. It follows, therefore, that starting too low may result in extremely low selling price. However, if you start at a slightly high price, you will land at a favorable price even after the negotiations.
For example, if you list a property for $300,000 and a similar one for $330,000. Suppose, during the negotiations, you discount the first house by 5% (selling it at $285,000) and the other one by 10% (selling it at $297,000), you will still end up with more money from the sale of the second property.
For more information, talk to a professional like Sanville Real Estate.Share