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Last week I wrote that I generally price my listings a bit above the “clearing” price in order to allow bargaining room. I define “clearing price” as my opinion of the correct value of the property after studying my comparative market analysis. I generally allow about 5-10% of bargaining room. However, I never price a house $300,000 or $400,000, or $500,000 above it’s true value in order to impress the seller and obtain the listing. Some brokers utilize this technique often. Then, they pressure the seller periodically (sometimes every week) to reduce the price. We see price reductions frequently with comments like: “price reduction” or “bargain” or “motivated seller.”

The overvalued price technique represents a bait-and-switch approach by the listing broker in order to obtain the listing. Inexperienced people can be susceptible to the overpriced methodology. They don’t realize that they are diminishing their chances of ultimately getting the property sold at the correct price because it will languish on the market for a long time. The number of days on the market is visible to prospective buyers. Some buyers will think: why is it on the market so long? What’s wrong with it? There’s also a monetary cost to wasting time with an overpriced listing: it costs money to maintain a property – insurance, taxes, etc. Call me. Love, Robin  

 By Robin Shapiro

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