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BERKELEY — When it comes to selling real estate, sellers often don’t understand that there’s a difference between list price and sale price. In many cases, a property’s final sale price will end up being quite different from its original list price, whether higher or lower. While a lot of factors play into this, a chief one is how the property is priced at the time of listing.
Few sellers realize that a property’s list price is actually a strategic tool that can be used to arouse buyer interest. At the time of listing, a real estate agent will often price a property just below market value. The strategy here is to lure buyers with the low price and attract multiple offers in hopes of starting a bidding war. As competing buyers present offers and counter-offers, the price will climb higher, ultimately leading to a final sale price that far exceeds the original list price. Bear in mind that for this strategy to work, it’s best to wait at least one to two weeks before accepting any offers.
Whereas underpricing a property often attracts more buyers, overpricing a property tends to have the opposite effect. Overpriced properties typically stay on the market two to three times longer than underpriced ones, and when they are sold, it’s usually to a single buyer who negotiates hard on what they’re willing to pay. This usually results in a lower sale price than if the property had been priced lower to begin with. That’s why it’s important to understand the difference between list price and sale price, and to take your real estate agent’s advice on pricing strategies.