Pricing a Challenged Property
Published on 11/21/18 by Michael Moore
- The scientific study of the human mind and its functions, especially those affecting behavior in a given context.
- The mental characteristics or attitude of a person or group.
- The mental and emotional factors governing a situation or activity.
Now, did I have to start with a definition of Psychology? No, but it's fun and sheds a little light on and speaks to some of the nuances of the topic.
Attitude, along with the mental and emotional factors influences behavior. It is up to the real estate professional to counsel with the client to arrive at the right asking price and market a property in such a way as to resonate with buyers and influence the right mental and emotional triggers leading to them writing an offer now - not later. This depends on what we have to work with.
Let's say it is a property that is not quite as attractive as many others. The seller still wants top dollar and wants it to sell in a month. This is fully possible, if the professionals counsel correctly and help the seller arrive at an understanding that creates a win-win for everyone. It can be hard for a seller to be objective about their property, because of emotional attachment, or perhaps other debts they want to pay off. This is one of the many reasons to use an experienced agent who can bring a balanced perspective to bear, in order to get the property sold in due time, at an acceptable price.
So this aesthetically challenged property needs to convey sooner than later. This is not the time to dabble in the higher end of the price spectrum. There is a time and place for this approach, but it is typically reserved for a seller who is in no rush to convey the property and is ok with a few possible price corrections in the future to see how all things pan out. For the property that needs to move, yet is challenged, this is the time to intentionally price it under market value, and to the point where it will definitely get a lot of attention.
You might ask, isn't this risky? Won't I be leaving money on the table? Not if it is done just right. I am not talking about an absurdly low price that would get an agent into ethical hot water. For one, most agents work for a brokerage, with a diligent manager looking over all the listings. Also, they have an office full of cohorts. The "what are you thinking" price would most likely be quickly noticed and pressure applied to correct it. I'm talking about a lower price where those same people look at it and say, "ok, that is a good deal, I probably have a buyer for that."
When enough buyers take notice of a particular property that is priced aggressively (on the lower end), it creates a buzz, and that buzz can be infectious. The property will have many visitors. Agents will be telling their buyers that they know the property is getting a lot of attention, so they best get in there and get an offer in if they want a shot at it.
Psychology - Thank You!
Usually, this kind of scenario makes way for a multiple offer situation, which in turn causes the price of the home to go up, where it will find its top dollar. Maybe it is still not what the seller was imagining, but here is the key - they will be getting market value - what a ready, willing, able buyer is offering, all other properties considered.
In other blogs, I'll cover other nuances of the selling price. One I'm thinking of right now pertains to the property price starting too high. Should I cover that now? Nah, I'll save it for another blog, I know you'll find it.