Listing your Home Low? Not a Bad Idea. Here’s why:

When you are thinking about selling your home and want the maximum net price, strategy matched to current market conditions is key.  Setting the initial price of your home can be based on recent comparable sold properties, a stretch price, or pricing it lower than comparables to  create a controlled auction and bid the home up, often over current comparables.  Another strategy is to have it as a pocket listing adding to the mystique and perception of scarcity for the property. To determine what may be considered fair market value, you can work with your Realtor®, or sometimes we recommend an appraisal or two and use those reports for marketing purposes.  Both have their pros and cons, but sometimes the best strategy is for listing lower.  Here are three reasons to list your home lower than market value:

1. Competition is fierce: The market is saturated with homes similar to yours and you need to stand out. This can drive Buyers to your home when compared to others.
2. The home is in an area of a neighborhood not desirable: This includes busy streets, near an airport, or other nuisances that would make your home less desirable.  By pricing it lower, some buyers will overlook the fact that there is noise and in their minds, factor it into the price.
3. The home needs work: When you have a home needing work, buyers are going to look through and start calculating up the costs and subtracting it from the price.  By pricing lower, similar to point #2, people will view the home as a deal, and when the other buyers feel the same, a bidding war happens and the price goes up.

We have used this strategy with many of our clients and it has worked in their favor.  By way of example, we listed a three level home (not desirable for most buyers) and on a street with absolutely no parking in the Hollywood Hills.  It was priced low to compensate for the features not desirable.  The home was priced at $1,800,000.  But, it didn’t take long for buyers to overlook it all and the home sold in 9 days, with 3 offers, and for $1,925,000!  That is a $125,000 increase!  When a bidding war happens, the animal spirits rise and the home becomes a competition for who is the lucky buyer who got the deal.