• The “price it according to worth” approach
This approach sets the asking price between the market value benchmarks, for example at $585,000. It is likely that home shoppers will recognize the home is priced competitively, and pay full price.
• The “underpricing generates interest” approach
This approach assumes that underpricing the home, for example at $550,000, will motivate buyers and create a bidding war. But there is no guarantee it will, and the goal of selling the home at its true market value is very likely lost.
FACTORS TO CONSIDER
Is your asking price arbitrary?
Prior to the internet, a seller’s asking price did not really matter much. As long as a house was not ridiculously overpriced, an interested buyer would make an offer. For example, if a seller was asking $585,000, a buyer might offer $525,000 and try to justify the offer by pointing out several deficiencies in the property (like an older roof). The seller possibly would counter back at $575,000 and remind the buyer of all the great features of the property including the fact that the roof had been inspected and had a remaining life of at least 10 years. The two parties might then “split the difference” and agree on a price of $550,000. This process was called “a meeting of the minds” and the result was, by definition, the fair market value for the home.
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