I classify list prices for real estate as being wise, stupid or sleazy. A house that is priced well – priced to market – and wisely should sell right away. Pricing stupidly causes delay, as we’ll see. And if the list price is sleazy – such as $449,999 – the buyer will be hostile to the seller and the listing agent from first contact: Conniving people are connivers.
Take a look at this Expired listing:
Both the listing agent and the seller knew on Day Zero that the market value of the home was $360k. The stupid Original List Price says so, as does the subsequent List Price reduction, also stupid: Both numbers are hinting at $360k, while simultaneously praying that buyer’s agents can’t comp and buyers can’t cope with so many confusing numbers.
Had the home been priced to market – $360,000 – on Day Zero, it probably would have gone for full price – or more? – by Day Seven. Instead, by pricing the property stupidly, the listing expired at 89 DOM.
But wait. There’s more.
Here it is again, Closed yesterday. Priced stupidly yet again, again clearly hinting at $360k, but this time the lister stood by his number, dagnabit! Finally sold at a small discount – after six-and-a-half-months(!!) from the original listing. 158 total DOM, 95.33% net-SP/original-OLP.
There is no rationale for any of this. Both listing agents knew what the home should ultimately sell for, and they must have included the seller in their wily machinations: Phase 1, over-price; Phase 3, profit!
The theory is what? We’re so smart we can trick those clueless buyers – and their appraisers – into over-paying for a largely-fungible production home.
As witness – here and day after day on Facebook – it doesn’t work. A sleazy price annoys the buyer, but a stupid price confuses him – necessarily introducing delay.
I believe in the sweet spot – the price that makes buyers act immediately. Priced wisely and to market, a brand new listing should be irresistible to the buyers you’re looking for – ideally so much so that they bid against each other to snag the property. There is no greater energy for a new listing than in its first weekend on the MLS, and that sweet spot price is what incites all the action.
You don’t have to take my word for this. You can see it all here in black and white: The listers and the seller knew all along that the house should sell for $360k. Thanks to repeatedly stupid pricing, it only took a buyer 158 Days-on-Market to figure that out…
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