Wednesday, September 29, 2010

Can home pricing be part of a bigger strategy?

Home prices in Los Altos generally follow the same pattern. A market analysis will generally show where a home should be priced and the listing agent will price is 1-5% of where it will actually sell. For example, if the market analysis shows a recommended price of $1,429,000 the agent may price it at $1,450,000 or $1,395,000 depending on market conditions at the time, time of year, and amount of competition.

Optimal Pricing is Set By The Market
I'm of the opinion that pricing spot on is the best way to go, especially in Los Altos. You'll get more offers and a better overall response from both agents and buyers. Overpricing, even in a hot market, will tend to turn off buyers and agents. I priced a great home in Central Los Altos at $1,395,000 this spring and it sold with multiple offers for full price.

There are those that differ and price low to drive a lot of offers. While that strategy may work from time to time, again, the key consideration is market timing. If there's a lot of inventory and quality houses, pricing low may not be in your best interest. It might actually be better for your client to price with the rest of the market and wait until some inventory clears. Don't give up $50K just to get a quick sale.

Beyond Pricing High or Low
I offer another option to pricing that I've seen done. I call it "weird pricing". We all generally follow the same rules with prices in the thousands and hundreds, ending in 0, 9, or 5. But could we stand out more with "weird pricing"! Like this:

$1,483,725
$647,182
and so forth...

If I'm looking down a list of prices, that weird pricing grabs my attention. Could is also grad the attention of other agents and buyers? Perhaps.

Then I ask these questions. Does this become part of an overall strategy to make the property stand out more? Could this weird pricing make a home sell faster in Los Altos than other listings? Would an offer be more inclined to round up or round down?

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