There had to be skeptics to my Los Altos Adventure last weekend.
Did you mis-price the house by more than a million dollars on purpose – or just by accident? Come on – you were 440 miles out of your normal market area….dude….you got lucky!!
I like to pay close attention to the market activity in the days before inputting a new listing. This was the latest listing by the guy who has just captured nationwide attention of his lowball $10,000-commission offer to the buyer-agents. As of Wednesday night, this was still active, and I told my sister that I didn’t want to compete directly because mine would help to sell his. If it was still an active listing when I woke up on Thursday, then I’m not coming up and we will postpone the listing for at least two weeks due to weather:
https://www.compass.com/app/listing/764-parma-way-los-altos-ca-94024/1510956913476773969
Miraculously, when I woke up the listing was marked pending – so I left for Los Altos.
All I had to be was the most attractive new listing in a very exclusive area (Nvidia is based in San Jose). There had to be losers from the Parma bidding war who were motivated to buy the next one, and there was nothing else for sale at this price point.
I was talking it up with every agent who came to my open house, and eventually I found an agent who was in the same office as the buyer-agent of Parma – and they confirmed that it sold for $4,150,000! Do you think I told that to every person I met over the next 48 hours….yes!
Let’s note my options: Either price attractively and have buyers bid it up, or price at retail and wait.
Here’s an example. The size of house and lot are pretty similar to mine, and it’s a busy street too. How are they doing? They listed for $3,998,000, and 30 days later they are still unsold:
https://www.zillow.com/homedetails/1107-Covington-Rd-Los-Altos-CA-94024/19533609_zpid/
There is an easy guide for pricing:
The more obstacles that need to be overcome, the more attractive the price needs to be.
I’ve been showing houses to buyers the last couple of days, and this theory has never been more clear. As we walk into a house that appears to be priced at the top of the range (or higher), the skepticism builds with every step – and we’re looking for any reason NOT to buy.
But when you walk into an attractively-priced home and see defects, they just confirm why the price is attractive – buyers don’t expect perfection when the price is attractive!
What happens once a home hits the open market depends on the listing agent. Yesterday, one was blaring his Jesus music, and another was chatting with the sellers who were still hanging around even though the open house started 15 minutes earier. Most listing agents aren’t implementing any bidding-war strategy – heck, yesterday there was one agent who didn’t even know the price of the home!
In reviewing the Los Altos comps, about half of them had closed over the list price, so I knew it was going to be hot. I knew that I was selling a house that looked all original, and was on a busy street. So we priced it attractively and I aggressively implemented my tried-and-true bidding war strategy that works!
I’m just speculating, but if your pricing were gimmicky then experienced agents will know after the first few minutes of contacting you.
However, I would imagine in your case your pricing strategy signaled to all interested agents that you were serious about selling.
That’s all anyone wants to know in this market.
Open Markets create price discovery. It’s called supply and demand. In closed markets, real market prices are artificial and not discovered. Hence, properly conducted auctions will tell you what your house is worth to a willing and able buyer at a given point in time. Do auctions tell you what it will be worth in 1, 2, 3, … years. No.
I willing to bet that JTR’s goal is to find the highest willing and able buyer at a given point in time.
(Y)our pricing strategy signaled to all interested agents that you were serious about selling. That’s all anyone wants to know in this market.
Yet it is so hard to find.
I ask agents every week, “How do you handle it when your receive multiple offers?”
Same response every time….”I don’t know, I’ll just get with the sellers and see what they want to do.”
How serious are you about selling homes if you don’t have any pre-planned strategy on how to handle a bidding war? Just the agent’s answer alone is a major turnoff to buyers.
Then you have the sellers who won’t do any improvements before listing, want to meddle in the process, and generally make it harder to sell the home by insisting on seeing proof of funds to show their house and/or make appointment-scheduling fit through the eye of the needle – though all could be due to the listing agent!
I willing to bet that JTR’s goal is to find the highest willing and able buyer at a given point in time.
That’s all!