Transparent pricing

Pricing reality check - it is transparent pricing, aspirational pricing, or motivational pricingHome sellers are employing different strategies to sell in today’s mixed market. One of them is transparent pricing.

Transparent pricing, aspirational pricing, and motivational pricing

  • Transparent pricing refers to the seller’s intention of offering the home for sale at a price that the seller is willing to accept. It’s what the seller believes to be fair market value.
  • Today some homes are priced with aspirational pricing, which means what the seller aspires to get.
  • Other properties have motivational pricing, or what I like to call mirage pricing. That’s an unrealistically low number used to obtain more offers and push the ultimate sale price higher.

Aspirational pricing usually results in homes that either don’t sell or that only sell after price reductions and at a price lower than would have been obtained with more realistic pricing.

Motivational pricing causes confusion for many buyers, especially if they are new to the market, or uneducated about that home’s neighborhood or the market, or those who are either discouraged or unrealistically hopeful about today’s prices.

Transparent pricing is supposed to be more honest about the seller’s wants, needs, and expectations.

Most of the time, new construction offers transparent pricing. However, sometimes there are so many upgrades that buyers will want that the final price can be considerably higher than the base price.

Sometimes, though, when a listing agent describes the  price as transparent, it’s actually on the high side and is likely closer to aspirational pricing. In those cases, the label really only tells you the seller’s willingness to sell: “I’ll sell if and only if I get my price”.

How can you tell if the listing amount is realistic or too high or too low?

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Your home’s been on the market awhile, the listing is about to expire, and suddenly agents are previewing it: why?

About to expire listingUnfortunately, there’s an ugly underside to selling a home that has been on the market awhile.  Here’s how it goes. Your home’s been on the market a few months, the listing contract is about to expire, and suddenly (after several very quiet weeks) other agents are previewing it.  Do they have interested buyers?  Did inventory suddenly drop?  Did they suddenly realize what they were missing?

Probably not.

Sad to say, there are real estate agents here in Silicon Valley and throughout the country who wait and watch for old listings to expire so that they can then prospect them.  There’s nothing wrong with approaching a home seller whose property did not sell provided that the old listing contract is over (the listing is expired).  But what I’m talking about is just shy of that.  These real estate sales people are hoping that by showing an interest, they will be “top of mind” when the weary home seller searches for a new Realtor or other sales person. By scheduling a preview appointment, at the very least they can drop a business card into the seller’s hands. And if they are very lucky, the seller will be home, and they can have a conversation with that home seller. (What they are thinking is this: “I can get in front of a potential client!)

This is very frustrating for home owners who are trying to sell their house, condo or townhouse.  Naturally they tidy up before the agent comes by to preview.  In most cases they will leave the house for an hour or so (that is best).  But in any event, in many cases those preview appointments are not for actual buyers at all – but just a way to drop a business card at the house, and perhaps to meet you, the market weary seller.

What can you do to avoid this?

Sometimes my clients will tell me that they want a 4 month listing.  No problem, but we will make it for 6 with an easy exit listing clause.  That way, if for some reason the home doesn’t sell within four months, they can then remove it from the market and not deal with the 9th hour agents who provide a mirage of interest.

There are other strategies to use, too, to keep from being barraged by real estate sales people who don’t have an actual buyer.  But perhaps the best one is to have a listing that can be cancelled and a slightly longer market time to prevent previews from agents who are far more interested in listing your property than getting it sold now, under the current listing agreement.