We’re not debating whether you should or shouldn’t be in the market right now, we’re talking about what sellers need to think about when they want or need to be in the market. Price reductions are a feature of this market. The fear is under pricing and leaving money on the table so there is a natural tendency to overprice because the market isn’t easy to predict. The question is how much and how often?
What is the best strategy? Consumers tend to think in ranges. Some websites (RMLS.com, Yahoo.com) let you select the range by entering the actual digits of the range. Have you ever talked to someone and have them say my price range is between $301,000 and $317,000? Other site have drop down boxes with fixed ranges (Realtor.com uses progressively bigger ranges as price increase). Other than the monetary difference, there isn’t a lot of difference between $331,000 and $337,000. It is less than a 2% difference and does not change the pool of buyers that are looking at the price. There is a difference between $321,000 and $327,000 though. Same percentage but we’ve moved past one of the thresholds so the buyer pool changes because the home will be returned to buyer using a different set of criteria.
The hard part is when you look at $25,000 increments on Realtor.com in the $200k price range. You’re talking 10+ percent to get between thresholds.
How would you price it?
Hopefully a day will come where the median point of one’s price range will be 3x their income – with 3.5x being the high and 2.5x the low…
TheDude: indeed, however I would modify your statement and say that the range should be between a maximum of 3x income and no minimum. The house I live in now cost 1.5X my income back in 1990.