An Absence Of Competing Listings In A Broad Price Range Does Not Mean You Can (Or Should) Round Your List Price Up To The Top Of That Range
Scott P. Rogers
Most (all?) home sellers want to sell their homes for as high of a price as is possible. Makes sense. Why wouldn't you want the best possible price for your home?
Pricing in a low inventory can lead to some interesting questions...
If we look at recent sales that are comparable to your home, and we see a sale for $395K, $400K and $405K... we might conclude that your home is worth right around $400K in the current market.
Different sellers then might choose different pricing strategies:
- $395,000 (just under market value)
- $399,500 (market value, less a smidge to achieve a nicer number)
- $405,000 (let's be reasonably optimistic)
- $409,000 (let's be really optimistic)
- $415,000 (let's be super duper optimistic)
- Etc., etc.
But what if, as you are choosing a price for your home, and you see these list prices of homes in your school district...
- $300,000 (much smaller house)
- $305,000 (much smaller house)
- $307,500 (much smaller house)
- $455,000 (larger house)
- $550,000 (much larger house)
It might be a bit tempting, for some sellers, to then round up from that intended $400K target sales price all the way up to $449K or $450K.
After all, if someone wants to buy in that school district, and they're going to pay $400K or more, they don't have any options until they get up to $455K. So, why not just price a bit under that competing house?
Well, maybe you can already tell from the information laid out above, but buyers will likely look at your $449,500 price and think...
[1] This house seems a lot more similar to those other homes that recently sold for $400,000.
[2] This house is a good bit smaller than the competing $455,000 listing.
[3] I don't think $449,500 is a reasonable price for this house.
[4] It's hard to imagine negotiating a $449,500 house down to $400K or even $410K, so I won't make an offer.
