We worked with a homeowner this simply wants to test the market incentive being actually motivated to sell. This "tester" typically prices the home I just to see if there is any action or appeal. If there is no action and no buyer takes the bait, they may drop the price or they may take it off the market completely. They think that if they can get the full price, that's great! If not, they didn't really need to sell in the first place. However, this can get burned as we have seen in the past. A good real estate agent will educate their homeowner on the current market conditions and will suggest a price point for the home. Each real estate transaction is different and pricing and marketing strategy can be different depending on where you live. Even micro markets from one neighborhood to another can change depending on the type of buyer and how hot the market really is.
After reviewing a home that the seller is considering selling, we can come up with a certain price point. However, these "testers" will usually pick a price that is higher than recommended. This is usually anywhere from 5% to even 10% higher than suggested. Many homeowners feel that they can simply negotiate with the buyer if they choose a higher price and come down to the price that was originally suggested. However, even the asking price can be a first impression of the home, the agent, and the seller.
Read more: Dangerous Pitfalls to Overpricing Your Home
In a hot market, sellers may be tempted to overprice their home simply due to the fact that they are interested in what will happen. Regardless of what a real estate agent suggests, it is ultimately up to the homeowner to decide on the final price point.
Regardless essay, homeowners that overprice their home dramatically end up sitting on the market for longer than anticipated. If there are serious about selling the will continue to drop the price but at this point, the price may be lower than originally suggested, allowing the seller to actually net a lower profit than have they set the price at the suggested list price from the beginning.
All in all, testing the market can have a lot of pitfalls, one of which is bringing the entire market area down because of the home doesn't sell at a higher price, it can affect the market value for the entire neighborhood.
Related: How Agents Price and List Your Home
Bottom line, it's key to go with your real estate agent suggestion on pricing. They know what they're talking about, we know how to negotiate, and we know the market.
Want to know how much your home may be worth? Give us a call today.