A Case Study in Effective Home Pricing

In January of 2014 I completed a CMA on a 4 bedroom 2 bath Single Family Residence.  I advised the prospective seller that the home's value was just under the $400,000 mark at about $385,000.  I thought that $399,500 was definitely on the high side, but not high enough to be completely unrealistic.  There were comps that closed above that price so appraisal wouldn't be an issue. The prospective sellers realized that they had a few financial items to get sorted out before they made a move so they chose not to list at that time.

In January of 2015, one year later, I completed a second CMA on the same home.  This time the property value came in at just above $400,000 at $412,350.  We listed the property for sale at the exact same price I had suggested earlier; $399,500.  I had proven to these clients that I knew what I was doing and reassured them that if they'd never have to sell at a price that they weren't comfortable with.

On February 18th, 2015 we listed the home at $399,500.
On February 23rd we reviewed 7 offers, two of which came in at $420,000. We went pending on the 23rd with an estimated Close of Escrow (COE) date of March 20th, 2015, with the right to possibly rent back until the sellers closed on their new home.

I am virtually certain, although there's no way to turn back time and test it, that we would have been lucky to broken the $400,000 mark had we listed the property for sale at an overly optimistically price of something like $425,000. I believe that home buyers, first time buyers, and investors cap their search criteria at numbers like $300k, $350k, $400k.  These number are, for statistical purposes, absolutely arbitrary, but psychologically...they matter.  Knowing that we'd capture more prospective buyers under the $400k mark than we would over the $400k mark paid dividends.

Receiving 7 offers gave me and my sellers the confidence that if one buyer scoffed at a possible counter offer, we had 6 more in the running.  If we'd overpriced the house and received only 1 or 2 offers, we'd not have had the security to negotiate strongly.

At the time of this post, the property discussed above is "Pending."  We won't know if it's going to close until it does!  That, however, has nothing to do with the pricing and everything to do with the property inspections and the current condition of the home.  The pricing strategy worked...again.

We'll update this post once we've closed escrow. Stay tuned!

Thanks in advance for remembering my name when the topic of Real Estate comes up in conversation.  

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Until next time.

Andy Blasquez  

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