Selling Your Home in a Hurry? Try Pricing it a Bit Higher

If you are trying to sell your home in a hurry, your first instinctive thought might be to drop the price in order to attract more buyers. Maybe you should try another approach. It seems counterintuitive, but increasing your asking price just slightly can attract more potential buyers. The theory is, in a competitive market as we know; you may actually sell your home faster by pricing it a little higher than other homes in the area.

This is all based from a study published back in 2013 in the Journal of Economic Behavior & Organization. Their findings were that homes listed for 10-20% more than comparable homes sold more often. The study had a 14,000 survey population of real estate transactions with the average sale prices of properties of $234,000. For every 10% increase in asking price, homes sold .05-.07% higher.

The author wrote, “Pricing a home 10 percent to 20 percent lower than comparable homes led to a…decrease in the expected price”. Here are the reasons and a way to make this strategy work for you.

The Power of Perceived Value: Any marketer knows consumer see more than just a number when they look at a price of an object. They see it as a direct reflection of the items value.

For example: when you walk into a shoe store and see two pair of shoes, one pair for $80, and the other pair for $40. You will automatically assume the $80 pair is better due to higher technology, more comfort features, etc. The thing is though that you have no idea how much these actually cost to make, so the retail price is your best indicator.

This perceived value can also work for home sales. When a buyer is looking at identical listings other than price, (same number of bedrooms, same location, square footage etc.) they assume the more expensive house is either overpriced, or has better features than make it more valuable.

This can lead to a higher priced home being snatched up faster for several reasons:

  • New buyers- it might attract a new class of buyers who wouldn’t normally be attracted to a lower price bracket.
  • Confirmation bias- it will make buyers ask why this home is worth more. Once they ask themselves this question they will then begin to search for the evidence and confirm their belief.
  • Higher bids- initial bids are higher, as they are based on the asking price, which can lead to higher sale prices.
  • Market time- the longer a home sits on the market, the more the perceived value decreases. If a home is higher priced and bought faster, its perceived value remains strong, unlike the home who sits on the market as if there was something wrong with it.

How to get more for Your Home:  Increasing the price can help get buyers in the door and looking for ways to justify your home’s perceived value. You need to back those impressions or else the buyer will walk away thinking you overpriced it. Here is how you do that.

  • Staging- staging your house the right way is one of the most effective ways to present your home in a great light without renovating completely. Well staged homes can sell 43% faster and for 6% more.
  • Curb appeal- professional landscaping can increase the homes perceived value anywhere from 5% to 11%.
  • Capital improvements- adding a solar panel to your home will increase the value; same thing goes for a newly remodeled kitchen. These types of improvements will boost the value of your home.
  • Professional photos and a video tour- a survey by VHT Inc. has found that homes with professional photographs and virtual video tours increased the perceived worth of a home by 11.5%. Adding the online video tour boosted in another 6%.
  • Perks- another study by the Service Contract Industry Council found that offering a home warranty can get a house sold in an average of 11 days and for around $2,300 more.

When you price your home above the competition you can help move it off the market faster and sometimes for more money. While you do this though, be sure that your asking price is fair.

If the higher price shows the homes improvements and benefits, and if it isn’t too high, you might just find that listing your home higher will intrigue buyers looking for the “cream of the crop” within their budget.

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