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4 price strategies

4 price strategies

  • Posted by: Bojan Trivanovic

Here you can find the four most popular pricing strategies for real estate sales:

1. The “far above market value” strategy

According to the motto: You can negotiate.

Inexperienced salespeople often opt for the “far above market value” strategy. They speculate with finding a buyer who does not know their way around and who “accepts” the overpriced price. Unfortunately, this strategy rarely works. Nobody pays more for goods than they are worth – especially not when it comes to six-figure amounts.

If you play too high at the beginning, this tends to scare off potential buyers and you sometimes miss the time window for your sale. Because buyers watch the market: the longer a property is offered, the more skeptical they become. It gets worse if you subsequently gradually go down the price. This gives the impression of a problem property that quickly becomes a slow-moving object.

Ironically, the “far above market value” strategy often results in the final purchase price being well below the fair market value.

2. The” slightly above market value “strategy

Here sellers offer their property 10% to 15% above the market value in order to create enough leverage in the subsequent price negotiations.

An approach that is understandable at first glance. On the other hand, even a slightly higher price is sufficient to scare off price-sensitive interested parties. Ultimately, it comes down to the same thing as with strategy 1: the property often stays on the market for too long and may get the image of a problem property. In quite a few cases, a purchase price is achieved that is below the market value; you have to bear the loss.

3. The “fair market value “strategy

Our experience has shown that this strategy is the most successful way to sell your property. If you advertise your property at fair market value from the beginning, the chances are very good that it will find a buyer within a reasonable period of time.

Only – what is the fair market value? Determining the right price requires thorough knowledge of current market developments. It’s best to leave this tricky job to a real estate agent, because they have the most up-to-date and accurate information on the market.

4. The “below market value” strategy

The fourth strategy is the favorite of sellers who are under time pressure and want to get rid of their property quickly. What at first glance appears to be a particularly simple and uncomplicated variant is often due to the fact that the seller does not know about the real value of his property.

The high demand that such a “bargain” generates can drive up the offered price a little. Nevertheless, through excessive hurry and ignorance you run the risk of losing money.

Author: Bojan Trivanovic