Priced to “Sit” vs. Priced to Sell
October 4th, 2007 by Emmanuel Cervantes
Recently I came across a Blog on MoneyBlog.com that discussed how Real Estate Brokers/Agents have been using price ranges when marketing properties. They will actually give a price range that will state, “Property offered at $1.4mil - $1.6mil.” The Blog went on to discuss the tactic of Overpricing properties out of the market and stated that what these individual were actually doing was pricing these properties to “Sit.”
“Priced to Sit,” is exactly what we have been explaining to clients for the past year now. My partner and I have lost business to the competition because some Brokerages believe in the tactic of OVERPRICING!
We met with a retired couple who were ready to cash out and sell their 10 unit apartment building in a prime area of North Hollywood. We expressed that we wanted to sell their property and not just added it to our List of properties for sale. After our presentation, we informed the couple that we believed the property would sell for approximately $1.45mil and suggested a listing price that would allow for room to negotiate.
The competition came in with a listing price of $1.7mil…and to our surprise, WON the business. The property sat on the market for a few months. Unable to achieve the price they had suggested, the price was reduced! After FIVE months of being on the market, an offer was finally generated and the property sold for $1.45mil! That is a difference of $315,000.00, talk about PRICE RANGE!
It is extremely unfortunate that some individuals in this business do not have either the self-confidence or integrity to believe in their skills, that they do not believe they are the experts! It is disappointing to know some Brokers/Agents would lie to a client and promise an unrealistic price, rather then communicate the true value of the property! Their lack of confidence or ethic contributes to this craze of inflated values and misinformed property owners.
The reason why many owners are expecting to achieve these unreasonable prices is because of the countless Brokers/Agents that have been communicating inflated, unreasonable and unachievable value! We cannot be controlled by the fear of losing business because we are communicating the true value of a property. We do not determine prices, the market does!