The Benefits of Competitive Pricing:
1. MORE AGENT AND BUYER ENTHUSIASM
Both agents and buyers show enhanced enthusiasm in a competitively priced house. Agents like to talk and show such houses with interest. Buyers consider them good deals.
2. SHOWN TO SELL, NOT JUST COMPARE
Prospects are shown competitively priced houses with the intention of buying, not to compare with the other realistically-priced properties in the neighborhood.
3. FASTER SALE
Experience shows that competitively-priced houses move much faster than those overpriced. Rarely will a house priced competitively end up an expired listing.
4. ULTIMATELY HIGHER PRICE
Generally, the higher the initial price, the lower will be the actual sales price. Statistically, a house that sells in the first 30 days will bring the highest sales price, and that amount will decline as time passes.
5. ABILITY TO MOVE TO NEXT HOME
Over eight out of ten repeat homebuyers sold their previous home before purchasing another home. This shows the importance of competitive pricing for moving the house within a reasonable time to enable the seller to purchase another home.
DANGERS OF OVERPRICING:
1. MINIMIZES OFFERS
An overpriced house discourages prospective buyers from making offers since the difference between the asking price and the market price becomes substantial.
2. AGENT ENTHUSIASM AND RESPONSE
Agents lose interest in property that is overpriced. They do not spend as much time in moving the house as they would if it was priced right.
3. QUALIFIED BUYER EXPOSURE
Overpriced houses fail to attract qualified buyers, or attract “wrong” buyers.
4. DECLINE IN SHOWINGS
Agents avoid showing overpriced houses in order not to lose credibility with buyers.
5. LOSES PROSPECTS FROM SIGNS
Prospects who learn about the house from the sign get turned off if it is overpriced. They do no pursue the matter to see the house.
6. LESS FOR SELLER
Eventually market interest in the overpriced property completely declines. As this stage is reached, the sellers become desperate and would sell at any price. In the meanwhile they must bear the maintenance and holding costs. The net result is that the sellers get much less than what they could have if the house was correctly priced in the first place.