Saturday, May 15, 2010

Comfortable Cushion

As a seller you undoubtedly need to be aware of some market psychology. The buyer will never agree to pay full asking price (currently only 3% of all listings are being sold at or above list price), especially not in this value-driven economy. This applies to all facets of consumer economies, but is most prevalent in real estate. By now, buyers have become so accustomed to getting deals on purchases they simply refuse to pay full-price. Additionally, buyers detest seeing the seller as having full control of the transaction.

What is the answer to this conundrum? Overprice your property. While this may sound immoral and unethical, it is really the only way to come out on top in a real estate transaction. Leave a comfortable margin around the price so the buyer feels as if his negotiation efforts are coming to fruition.

By elevating your asking price, you are effectively killing two birds with one stone. You are assuring you will get the offer you want and you are making the buyer feel comfortable in the transaction. You sell your property at the price it deserves and the buyer walks away feeling like he saved money on a great deal; everyone is happy.

Remember though, the key to selling quickly is to make sure you know the true value of your property so you can adjust the price “slightly” higher. It is also a good idea to round your price to a value readily searched on the internet. For example – if you are a 2 bedroom listed at $975K, round to $999,500 so every 2 bedroom buyer looking under $1M will be looking at your listing first.

Another key element of a good market strategy is if the seller has not received an offer in 30-45 days its better to adjust the price down to reflect the current market. Our records indicate the current time a sales listing is on the market is 112 days from list to contract, where the number drops dramatically to 77 with a price reduction. The price reduction will also give the buyer a sense of comfort because they believe the seller is getting less than what they originally wanted. Be flexible and willing to adjust the price accordingly; working with a specific game plan in mind from the start and you will find the right buyer.

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