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Carrington Connects

Pricing Your Home to Attract Competing Bids

Posted by Russ Laggan on July 28, 2015 at 1:40 PM

pricing-your-homeSelling your house can be a long, grueling process.

Waiting months to find the right buyer and then caving and taking less than your asking price can take its toll on even the most determined sellers.

And that’s all before the inspector starts pointing out every small imperfection, which is incredibly frustrating in its own right.

One of the most important factors in selling your home as fast as possible for highest possible price is choosing where to set your initial asking price.

At times, this can seem a lot more like an art than a science, but nothing else will have as big an impact on your eventual sales price.

Where Typical Pricing Strategies Fall Short

In order to get an idea of what your home is worth, your agent will assess what comparable houses have recently sold for in your local market and then adjust your home’s value according to features it may or may not have compared to those homes.

Many sellers prefer to start their listing on the high end of the value of homes in their neighborhood. They generally do this hoping that someone will fall in love with the home and buy it on the spot for full asking price.

They also rationalize that they can always lower the price later if necessary (most don’t believe this will ever be necessary).

The problem with setting a high asking price right from the start is that you are likely going to scare off potential buyers that may have been interested at a more reasonable price. These buyers might not be willing to give the house another look after you lower the price in a few months.

Pricing your house too high from the start can also give buyers the impression that you are going to be unreasonable to negotiate with, so many will not even consider looking at the house.

Price for Competing Bids

The far less popular alternative to starting with a high listing price is to start your listing at a price that is clearly on the lower end of what comparable homes are selling for.

Many people are turned off by this strategy because they feel like they would be leaving money on the table, but as you will see, that is definitely not the intention here.

Pricing your home below market value is going to attract a lot of interest. If it is as great a home as you believe it is and you have done your homework on cleaning and staging it properly, there are going to be multiple people who fall in love with it on site because they have preconditioned themselves to believing it is a great deal.

Once you get multiple buyers to fall in love with your house, you are going to find yourself in a position of power where each potential buyer realizes they are competing against other offers in order to purchase the house they have already fallen in love with.

When buyers know that they are competing in a multiple offer situation for a house that they really want, they are very likely to offer well above the asking price in order to ensure they get the house. You have effectively created an auction situation in which everyone participating loves the house.

Refuse to Accept Offers Until After the Open House

Schedule an open house shortly after listing the home. Then make sure it is a busy one. Invite your friends and family if you have to. Let everyone know that you will be accepting offers starting the following day and that you are already expecting multiple offers.

Go Back to Lower Offers

As the offers start rolling in on your house that is selling for such a great value, go back to each of the offers and ask them if they would like to be “more competitive.”

Let them know that there are already multiple offers above asking prices. This will get their competitive juices flowing, as they will fear losing the house.

Pay Attention to Terms

Always remember that there is a lot more to an offer than just the price. Carefully work through the terms that each potential buyer has proposed. Who is paying the closing costs? Is anyone waiving the inspection? Are they paying cash or will they need to get approved for a mortgage? Are they prequalified or preapproved?

Of course, the risk here is that no one shows up to your first open house and there is only one offer that is right at your asking price. But as long as you promoted the open house well, that just means that you would have had a long, difficult time selling your house at a higher price point. A bird in hand is worth two in the bush.

On the other hand, if you are successful in creating a bidding war for your house, you will be able to command a strong price and sell the home extremely quickly. What’s not to like about that scenario, right?

Want to create an all out frenzy for your home? Contact a local Carrington Real Estate Services agent today, and let’s get started.

Topics: Seller Resources


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