“Can a new listing be under priced?” I hear this question frequently.
The general consensus seems to indicate the answer is “No” because an under priced listing will be bid up to the fair market value.
This answer and reasoning is really a response to a different question; i.e., “Will an under priced property sell for the fair market value?”
Before proceeding it is important to stress and acknowledge that the fair market value is not a single number. Market value can easily vary as much as 1% – 2% plus/minus from the theoretical market value number.
Let’s hit the reset button.
Q1 – “Can a new listing be under priced?” Yes, a listing priced at $500,000 when the current market value is $525,000 is under priced.
Q2 – “Will an under priced property sell for the fair market value?” Not necessarily, as it depends on how much it is under priced.
Q3 – “Who wants to test this theory? Unless it is a pricing strategy, I don’t know anyone who wants to price low to maybe sell at market value.
I believe the right price, in conjunction with our Best Home Marketing approach, will result in not just a higher selling price than if under priced, but will in the end result in the seller walking from closing with more money and with less time on market.
We suggest the focus not be the top line number (the sales price), but the all important bottom line (the net at closing) and how long it takes to get there.
Avoiding False Starts
Pricing is by far the most important component of marketing because the wrong price is a huge False Start that will very likely upset the entire process. We put forth extensive effort to get the pricing right, and sit on the same side of the table with our client to share our findings, listen to client concerns, debate the numbers and then in the end, develop a mutually agreeable pricing plan.
Contact Miller Group Realty to discuss your plans for selling and be prepared to net more at closing in less time.