Listing Prices & "Leaving Room to Negotiate"

No Discount on This One

In a Buyer's market like today's, it's not unusual for gun-shy Sellers to want to "pad" their initial asking price.

Their rationale?

No matter where they set their initial asking price, aggressive Buyers are simply going to discount further from there.

So, why not pick a listing price that "leaves a little room to negotiate?"

There are three reasons that's not a good idea:

One. Self-selected peer group.

If you set your price too high, your home will be compared to more impressive homes asking the same price. And found wanting.

So, yes, you may have "left yourself room to negotiate."

But that hardly matters if there aren't any offers (or even showings).

Two. Even in a Buyer's market, well-priced homes can sell quickly, for above asking price.

Case in point: 5035 Glenwood Ave. (pictured above) in Golden Valley.

Listed in late March for $289,000, it sold -- in multiple offers -- the first week.

Ultimate selling price: $305,000.

Three. No Realtor can promise their client that they won't receive lowball offers (for all I know, the owner of 5035 Glenwood received lowball offers, too).

But lowball offers are a lot easier to repel when there is also a full-price offer -- or even better, multiple offers above list price -- on the table.

For Sellers, negotiating leverage is all about how many prospective Buyers are interested in your home.

If you price too high, the answer is usually few . . . or none.

P.S.: another fringe benefit of pricing well, and attracting broad interest: Buyers tend to pull their punches when it comes to negotiating any inspection issues.

Not Selling? Raise the Price

When is a Price Increase Really a Drop?

Normally, you don't raise your price when your home doesn't sell.

However, every rule has its exceptions.

The best example of a legitimate price increase is when the homeowner has invested substantial money to correct a defect -- for example, putting up a two-car garage where there had only been a one-car garage previously.

Even then, it's smart not to bump the price by the full retail value of the improvement.

That's because it's seldom the case that homes fail to sell because of one, specific issue; typically, it's multiple issues, including a too-high asking price.

So, to go back to the home with the new, two-car garage: bumping the price, say, $5k is really a price drop, because $5k is less than the value of the improvement.