One scenario I have seen multiple times in the Westchester Real Estate Market is a client listing a home, only to be undercut just a short time later by a similar home nearby. Our area has well-regarded schools. Well regarded schools come with high property taxes, so we see a flurry of listings from families whose kids recently graduated high school.
Usually, when I see this, the original seller more-than-likely does one of two things:
- Panic, and sell it to a previously rejected bidder at a fire-sale price
- Lower their price, which typically results in multiple rounds of price-cutting for both homes, which is horrendous not only both sellers but for the valuations of the entire neighborhood.
So what do I advise my clients to do when this happens? You might be surprised.
I tell them to raise the price. Yes, I’m completely serious.
Sellers rarely consider the optics of a price increase. And in most cases, though they are rare, they are viewed positively in the eyes of buyers.
- In many cases, home buyers interested in certain areas sit in the weeds and wait, and often delay seeing homes that interested them until they see price cuts. A price increase for a “watcher” is likely to promote action, as a price increase is viewed as a property that is in demand.
- Zillow, where a bulk of homebuyers start their research on properties, shows every price change that a property owner makes. Nothing weakens a buyer’s assessment of a property more than price cuts. The opposite is true for a rare price increase. Buyers ask themselves “Did the owner make an improvement? Has there been lots of traffic and multiple bids?” Often these questions result in showings.
- A price increase makes it easier to negotiate, and not only because your starting number is higher. When a buyer is aware of a price increase, they automatically eliminate the possibility that the seller is “distressed” or “motivated”. Nothing invites low bids more than a seller who is desperate to sell. Raising the price does the opposite.
So in closing, in this scenario, it’s important to think outside of the box. A similar lower priced listing entering the market is probably negative. Succumbing to the obvious, knee-jerk and panic reactions, will almost definitely result in a poor sale. And it’s important to get every advantage over the other listing that you can. What if your transaction costs were less than your neighbors? Well, that’s possible. NestEdge can list for less commission than virtually all traditional realtors.