Houses that sell over asking were priced wrong to begin with

[Anonymous]

Anonymous wrote:There are different strategies to price a house in different markets for different clients. I prefer fair market price but if selling in a hot market with low inventory, I would price it low and let bidders decide what's fair. I don't recommend pricing too high as then it becomes stale sitting on market through multiple cuts and people assume there is something wrong with the house.

This is the issue. And a couple of price cuts sometimes encourages low ball offers, since it signals that the price is unrealistic.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I feel like it's the agent's incentive to price fairly low. If it's under the market value, it gets bid over asking and then the agent can crow that they got their client a bid well over asking. And if you price too high, the interest is low, which is also not good for the agent whose comission doesn't differ much if you get 700K vs 750K on your asking price.

Exactly. That’s why a higher price can give a seller confidence that they were able to squeeze every dollar out of a house. The agent has no incentive to do that.

+1 to these pp's

[Anonymous]

Anonymous wrote:

Anonymous wrote:There are different strategies to price a house in different markets for different clients. I prefer fair market price but if selling in a hot market with low inventory, I would price it low and let bidders decide what's fair. I don't recommend pricing too high as then it becomes stale sitting on market through multiple cuts and people assume there is something wrong with the house.

This is the issue. And a couple of price cuts sometimes encourages low ball offers, since it signals that the price is unrealistic.

This is how we got our house under asking price. The owners priced so high in the beginning that no one bid on it. They had to do multiple price cuts and everyone assumed something was wrong with the house. It sat for 9 months!!!!
We made an offer under asking price and with contingencies and they accepted. The same house has increased in value by about $1.3 million more than we paid 7 years ago. Price matters!

[Anonymous]

This has been studied, and it turns out when selling their own houses, agents don't underprice and are stingier with price cuts. Hmm now why would they only underprice when selling other people's houses? We all know the answer.

[Anonymous]

Anonymous wrote:This has been studied, and it turns out when selling their own houses, agents don't underprice and are stingier with price cuts. Hmm now why would they only underprice when selling other people's houses? We all know the answer.

Link?

[Anonymous]

Anonymous wrote:This has been studied, and it turns out when selling their own houses, agents don't underprice and are stingier with price cuts. Hmm now why would they only underprice when selling other people's houses? We all know the answer.

This. They want the quick sale to get paid when it's other people's property. They want top dollar when it's their own.

[Anonymous]

Obviously there is a Goldilocks sweet spot that is high enough but not too high. The problem with too high is that it just comes down to one buyer and the seller bargaining with each other. Obviously it’s better for the seller if there are buyers competing for the house, focused on what it will take to win out vs. other bidders, instead of just what they think is a fair bargain between buyer and seller. This dynamic can work even if there is only one bidder, but that bidder wants to move quickly to prevent other bidders from materializing. When the asking price is too high, buyers don’t worry about other bidders swooping in, and the sellers lose leverage.

[Anonymous]

We sold our house a couple of years ago and got exactly one offer for the full list price. To this day, I'm not sure if my perspective should be that my agent picked the absolute perfect price or if we could have gotten more offers with a lower price. I lean towards the former.

[Anonymous]

Anonymous wrote:This has been studied, and it turns out when selling their own houses, agents don't underprice and are stingier with price cuts. Hmm now why would they only underprice when selling other people's houses? We all know the answer.

I’ve seen an agent sell their house. They priced it low and it sold way over. Please link your study.

[Anonymous]

Anonymous wrote:

Anonymous wrote:This has been studied, and it turns out when selling their own houses, agents don't underprice and are stingier with price cuts. Hmm now why would they only underprice when selling other people's houses? We all know the answer.

I’ve seen an agent sell their house. They priced it low and it sold way over. Please link your study.

DP here but I recall seeing this study too. It's real.

[Anonymous]

Anyone who prices high doesn't understand buyer psychology and marketing and is also doing their clients a disservice. It puts you in a defensive position trying to find buyers instead of giving you more leverage to negotiate other substantive items in the contract like contingencies, a rent-back, closing time frame, etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This has been studied, and it turns out when selling their own houses, agents don't underprice and are stingier with price cuts. Hmm now why would they only underprice when selling other people's houses? We all know the answer.

I’ve seen an agent sell their house. They priced it low and it sold way over. Please link your study.

DP here but I recall seeing this study too. It's real.

It's not "real" because you said so. Where's the link to the study? Agent here who priced his house slightly under where it should be and it escalated 22% over asking, 18 offers, no contingencies. If agents wanted to screw their clients, they would price the house high, not low. So your whole premise is totally wrong.

[Anonymous]

Anonymous wrote:I feel like it's the agent's incentive to price fairly low. If it's under the market value, it gets bid over asking and then the agent can crow that they got their client a bid well over asking. And if you price too high, the interest is low, which is also not good for the agent whose comission doesn't differ much if you get 700K vs 750K on your asking price.

Hm, our agent looked at comps the day before we listed and suggested we raise our previously agreed upon price by $25K. We did and it went for another $25K above list.

[Anonymous]

Anonymous wrote:I am always happier to price the houses I sell high and reduce one time if I need to. Besides, these ridiculous stories posted here about houses going 100k over asking are absurd. Houses that are priced too high sometimes won’t appraise!

Let me guess, you've never sold a house have you?

When you price high, you limit your buyer pool, e.g. fewer people will choose to even walk-through your house. You'll have fewer people bidding on the house. And it will stay on the market longer to find a buyer who will bid on the house. As the DOM climbs and the house sits, people start to wonder what is wrong with the house. Some will write it off and not want to chance it. Then when you have to drop the price, many buyers will "know" that there is something wrong with the house and you'll lose even more buyers.

One goal is to price is in the middle, not too high, not too low. This works best when you are in a modest to less desirable location.
Another is to price it slightly undermarket to try to get more eyes on the property and also induce a bidding war. This works best when you are in a desirable location.

[Anonymous]

This house sold for $286,500 over asking. The pricing strategy seems to have worked well for them.

https://www.redfin.com/MD/Bethesda/5430-Alta-Vista-Rd-20814/home/10655942