Have you ever noticed at antique sales or flea markets that dealers often price their antiques high to allow for bargaining room? Their real objective is to sell close to the “fair market value.” Some home sellers also price their homes high to leave room for negotiation. They believe that buyers want to bargain for a lower price before they will make a purchase.
There is a pricing strategy that works better on homes, however. Because homes are more easily compared than antiques, a real estate agent can provide detailed, factual information about recent home sales, establishing your home’s “fair market value.”
Another useful tool the agent uses is the “list to sale percentage” – an analysis of recent home sales which compares the listed price of each property to its ultimate sale price.
For example, if homes originally listed for $400,000 in a particular neighborhood have been selling for an average of $390,000, the list to sale percentage would be 97.5% for that neighborhood.
Before pricing your home, ask your agent to analyze your neighborhood, and then price your home no higher than necessary to allow the list-to-sale percentage to be applied by buyers. Two things are likely to result from this strategy: a full price offer is more likely to be received, and buyers will not be driven away by a home that appears grossly overpriced.