There’s a new dialog taking place in this area between sellers and their agents upon listing homes for sale. It used to be that it was almost impossible to make a mistake with pricing on a listing. With very few exceptions, no matter what price you put on a place somebody agreed to pay it…or multiple folks lined up to pay more than your price. Pricing required some thought, of course, because you wanted to maximize the opportunity for multiple offers and ususally you did that by making it seem like a bit of a value. Now the dialog is typically going like this:
Seller: Where do you think we should price the house?
Agent: I think we should list it at $850,000.
Seller: Well…we would be OK with $850,000, but we were thinking that we should go a little higher just to build in some cushion for the inevitable offer that comes in under the asking price.
Agent: What price were you thinking?
Seller: We were thinking $900,000.
Here’s the problem…sometimes this notion of cushion will actually push the listing into the “overpriced” category. Sometimes the cushion is really insulation from reality. This new thought process is certainly fascinating and to a very great degree, logical. The fear, of course, is that building in too much cushion will cause the listing to be on the market longer, experience at least one price reduction and end up selling for less than it could have if priced agressively from the beginning. Buyers do indeed want to negotiate downward, it’s not necessarily wrong to anticipate that.
Pricing has always been a bit of an artform. Now it sure feels like it’s gone to the next level.