There aren’t many people who ignore price when they’re making a purchase, and certainly not when it comes to real estate. Bob Nelson, Eugene real estate investment broker, with Pacwest Real Estates Investments, and Marcia Edwards, Eugene residential broker with Windermere Real Estate, continue to break down the seven reasons why properties sell. In this installment, they look at the pricing and positioning aspect of the success model.
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There are two primary strategies when it comes to pricing, and both can be used successfully. One strategy is to overprice a property to allow enough room for a bit of negotiation. The attitude that “This is the price. Take it or leave it” can cause some problems—unless you know you’ve got something so unique that people will race after it. Otherwise, you want to create a sense for the buyer that they are bargaining from a position of a bit of advantage on their side of the table. They’ve got to feel good about the transaction.
It’s important to keep in mind, however, that this market may be pretty tight in the numbers right now and may not continue to go up or appreciate at the rate it has been. You want to be careful not to float above where the buyers are. Buyers may grow increasingly conservative with the interest rate shifts and other factors, so take that into consideration as you select a pricing strategy. You’ll want to position yourself among the competition. It’s irrelevant how quickly things are selling and what else is available at this time.
Bob Nelson, Eugene Commercial Real Estate Investment Broker:
The other strategy is to underprice the property, and expect three, four, or five offers. It depends on the situation of course; however, as the bidding war starts, each buyer outbids the next person and even though you started at a fairly ‘low’ price, you may end at a price that’s higher than even what the list price would have been.
When you’ve got not enough supply and a huge demand. It creates kind of an auction atmosphere. You have to be careful with that as a broker to be somewhat gentle in the negotiation process, or you risk offense and buyers walking away.
Property Pricing Strategies is from Bob Nelson and Marcia Edwards “Real Estate Today ” Eugene, Oregon, radio show, which airs at 5:30 daily on KPNW.