Overprice or Underprice What Is Better?

There is an art to pricing a property appropriately. You want to get the most money for the sellers as possible but not price it out of the market. A really attractive price will certainly draw lots of attention, but you do not want the sellers to leave money on the table either. It can really take a lot of thought to come up with the just the right number. Some people use the argument that underpricing a property can cause a bidding war and drive the price upwards. I usually lean in the exact opposite direction. I tend to think that overpricing properties, just a little bit, actually brings in greater revenue for my sellers.

As it turns out, I am not the only one who has drawn this conclusion. Florida Realtors recently put out an article that agrees. According to data published in the May issue of the Journal of Economic Behavior & Organization, new research suggests that pricing a property 10-20% under market value actually netted the sellers less money. Often times it did cause a bidding war but not enough of one to make up the substantial difference caused by underpricing it initially. On the other end overpricing the property by around 10-20% did net the sellers a slight gain. The study also indicated that when buyers were presented with a slightly higher purchase price they often looked for positive attributes to justify the price. The same was true on the other end. When the price was lower, they wondered what was wrong with the property.

Of course, there are many factors to consider when pricing a property for sale. One of them is the timeframe in which the seller needs to sell. You don’t want to be priced too high if you need to move your property quickly, and long market times increase the sellers’ carrying costs which eat in to their profit. The long of the short is that you need an aggressive, knowledgeable professional to price it for you.

A Nectar Real Estate professional is always ready to help you with your real estate needs. Feel free contact us any time!