Pricing a home low enough to draw "on-the-fence" buyers out of the woodwork

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Real Estate Agent with Keller Williams Preferred Real Estate

We have heard it over and over again about overpricing a home will result in an unsold home, taking a long time to sell, and reducing the price, over and over again. every article I have read mentions "price reductions" as a necessary solution. And that sellers need to be priced somewhere in the lower end of the majority of comparable homes. This is all common sense. But what results would we have if sellers were to list their homes at a price low enough that it just could not be ignored?

For the majority of the country, it is a buyer's market, and these buyers know it. So, they are looking for rock bottom prices, and incentives out the wazoo. I am wondering if pricing a property so low would draw numerous buyers out to see a home, thus resulting in multiple offers, and hopefully increased dollar amount to beat out the other buyers, or bidding wars as it is sometimes referred to.

For instance, if a property was priced $15k below all other comparable properties in the area (i.e., $175k-$185k), but you listed it for $160k, with being comarable in size, location, amenities, and condition. Do you think this would spark activity? Maybe even on the listing comments that there is only going to be 1 Open House held for the property on such and such date, drawing as much buyer interest as possible in such a small time frame. And then have in the details that offers are to be submitted by such and such date (maybe 2-3 days after the open house). Then be able to sit down with the seller and review all offers that have been submitted.

Now, I know there would be mixed feelings about this from both the agent and the client side, but I would like to hear some feedback.

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Rainer
167,121
Tamara Perlman
Referral Network Inc. - Truckee, CA

We have seen houses priced under market drawing multiple offers here in the Truckee/Lake Tahoe CA area.  We have not been hit as hard as other areas, and being a resort community, our buyer pool is different than other markets.  The other plus is that these offers are coming in within the first couple of weeks of listing or less.

Jun 16, 2008 03:26 AM #1
Rainer
19,143
Joseph Grabowski
Keller Williams Preferred Real Estate - Yardley, PA
REALTOR - 4saleinbucks.com

Hi Tamara,

Yeah, I would think with this sort of method, that it would attract buyers out quickly since most buyers have been looking, and scouring for deals. And whenever a new listing hits the market, they get right out to see it. And I would think this would result in numerous offers quickly.

Jun 16, 2008 03:37 AM #2
Rainer
167,121
Tamara Perlman
Referral Network Inc. - Truckee, CA

If no offers come in, then I'm guessing the market is worse than we thought!

Jun 16, 2008 03:42 AM #3
Rainer
19,143
Joseph Grabowski
Keller Williams Preferred Real Estate - Yardley, PA
REALTOR - 4saleinbucks.com

lol  If that is the case, just have to resort to the normal methods I guess. But honestly, if this method wouldn't bring in offers, then I don't know what would.

Jun 16, 2008 03:44 AM #4
Rainer
109,059
Linda Tremblay
Long & Foster Real Estate, Inc, PA License #AB065488 - Doylestown, PA
Associate Broker - Bucks County, PA Real Estate Services

I have definitely seen that work.  Price the home a little under market and watch the frenzy.  It is definitely better than the sellers who still think they can price the home $30000 over market.

Jun 16, 2008 04:17 AM #5
Rainer
19,143
Joseph Grabowski
Keller Williams Preferred Real Estate - Yardley, PA
REALTOR - 4saleinbucks.com

Hello Linda.

I think if more sellers tried this approach, it would bring the buyers out and maybe they would stay out.

Typically what sellers have been doing is just dragging the sale of their home out. i.e., List at this price, month after month reduce, reduce, reduce again until it sells. Until these buyers come out and eat up this inventory, prices will continue to drop.

Jun 16, 2008 05:04 AM #6
Rainmaker
416,596
Mesa, Arizona Real Estate Mesa Arizona Realtor
Homes Arizona Real Estate LLC - Mesa, AZ
AzLadyInRed

Joseph, it's an absolutely good approach; however, I have found that many things work or not. Pricing it good, and possibly the best in the neighborhood is a great way to start; however, other incentives are frequently of use as well such as buying down the buyer's loan, discounting, etc. ;-)


Pepper

Jun 16, 2008 03:48 PM #7
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Rainer
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Joseph Grabowski

REALTOR - 4saleinbucks.com
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