Recently I encountered two very different types of listings for products for sale on the market.
There are properties that sit on hold for about a week, essentially flying off the shelf.
There are listings that have been sitting on the market for months without any significant action being taken.
Often times, the difference is simply in price, not in the quality or amenities of the home.
So, if you’re serious about selling in today’s housing market, consider a lower price rather than a higher price.
Choose a listing price lower than the Zestimate or Redfin estimate
One of the easiest ways to generate a lot of excitement for your home is to simply price it right.
This generally entails listing it at a lower price versus a higher price. But what is low and what is high?
Well, your real estate agent should be able to help you with this, but there are also simple guides to find out.
Most properties have a Zestimate, which is Zillow’s estimate of the market value of the home.
No, it’s not an actual home appraisal, and it can’t be used in place of an appraisal, but it’s often a good starting point for determining value.
The same feature can be found on Redfin and is known as Redfin Estimate. Same concept, just different company.
Even a Realtor has something called a “RealEstimate,” which includes three different estimates of the home’s value.
Sometimes these estimates are higher or lower than others. For example, your estimate may be lower than your Redfin estimate. Or vice versa.
In any case, a good agent will look at comparable sales in the immediate area that have recently sold when determining a good listing price.
They may also tell you to ignore the Zestimate or Redfin estimate and that it’s not accurate, blah blah blah.
But, and this is a very important detail, will the potential buyer look at recent fixtures or will they look at the Zestimate? Probably the last.
Why? Because they are consumers and these types of estimates are 100% geared towards consumers, also known as home buyers. It’s quick, it’s dirty, it’s well known, and it’s easy to get caught.
Researching actual sales companies is a more complex process and can go over the buyer’s head.
Let’s consider an example
I recently found a property that had been on hold for about nine days. Which is a very good thing, considering it’s been a very tough year for the housing market.
The combination of high mortgage interest rates (relative to recent years) and still-rising home prices has put significant pressure on affordability.
Meanwhile, listing in November or December is usually not ideal as there will usually be fewer buyers in the market.
After all, they will be more focused on end-of-year things, shopping, vacations, travel, etc. Weather can also play a role.
Despite this, a property in Southern California went from listed to pending within nine days.
And if you look at the list price compared to the Zestimate and Redfin Estimate, you’ll find that it’s a little less expensive.
This is important because when potential buyers look at listings, they will see these estimates. It will tell them if the list price is lower or higher than the appraised value.
Human psychology will tell them it’s a bargain if its price is below the estimate. Just like any other product you purchase, it will be considered “on sale” or “reduced.”
It’s no different than a pair of shoes at 20% off, you’ll feel like you’re getting more for less.
Conversely, if the listing price shows higher than the estimate, that buyer may be turned off and feel like the seller is greedy.
This may cause the buyer to move and consider other properties instead.
Also make sure that the price is below the main thresholds
Other than listing below the Zestimate, it may also be beneficial to list below the headline pricing threshold.
For example, if the Zestimate is $1,520,000, going with a list price of $1,499,000 accomplishes two things at once.
You get it under the Zestimate and you get it for less than $1,500,000, which may be the user’s maximum price in their app settings.
This may open up the property to more users who may have their settings adjusted to only see properties for sale under $1,500,000.
If you were to put down $1,505,000, which is still below the Zestimate, some users may lose your property, even if it is affordable for them.
Likewise, if the Zestimate is $520,000, listing at $499,000 could achieve the same result.
And if you’re worried about the property selling for less because of the low list price, that may not actually be the case.
Often times, you can attract more attention to your listing if it is priced lower, perhaps getting multiple bids, better terms, etc.
It can actually be risky to list a property high, then see the property on the market, then have to apply a price reduction and end up in a similar location.
Why don’t more people do this?
A common complaint from real estate agents is that their clients did not listen to their advice on setting a listing price.
In other words, the seller wanted to list it for more than one agent. Go figure, right?
From the agent’s perspective, a lower list price doesn’t result in a much lower commission because he or she only earns 2-3% of the sale price. So, if it’s $50,000 less, the reduction might only be about $1,000.
But for the seller, every dollar counts. Probably $50,000 less!
However, it could be worse if the property remains on the market for several months. As for why the seller list goes up, I think they are often potential sellers.
they will sell, but they don’t Must He sells. So they will put the property at the top of their price range and wait and see.
Often, this leads to a lot of waiting, and in the end we see that nothing happened. Still listed months later with few to zero bites.
Of course, they may not care much since these types of sellers are just testing the waters and are not that serious.
Read on: It’s okay to negotiate with your real estate agent
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My work experience in the early 2000s inspired me to start writing about mortgages 18 years ago to help potential (and current) homebuyers better navigate the home loan process. Follow me on Twitter for hot takes.
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