Underpricing your house. Is it risky or a good strategy for Tampa Real Estate?
If you are thinking of selling your home, this thought may have crossed your mind: I should price my home high just to see what happens. Why not? Times are tough and no one wants to lose money, so why not try? But have you thought about under pricing your home?
Why would anyone want to do this? If you’ve been reading the newspaper and watching the news here in Tampa, you’re likely aware of the bidding wars. Clients have been saying to me, “my friends put their house on the market and it sold in one week.”
Why Does Underpricing Work in Tampa?
First, it creates a significantly larger number of prospective buyers interested in your home, while, at the same time, creating competition among other buyers. You will most likely receive multiple offers, and because people aren’t willing to lose something they really want, this will encourage them to bid higher.
The underpricing strategy will be more effective in a market where inventory is very low like our Tampa real estate market. You can read more on how to create a bidding war here. This article will help you sell your home for more than you would by overpricing it.
Is it risky to underprice a home? As a seller you don’t have to accept an offer even if you receive a bid for the price your home is listed for.
The National Association of Realtors just published the home seller survey and these are the results.
Why overpricing your home may not be a good strategy:
- Time spent on the market and sales price compared with listing price are highly correlated. Generally, the longer a home is on the market before the home sells the greater the discount from the original listing price.
- As the time on the market lengthens the difference between sales and listing price grows. For homes on the market for at least 17 weeks, for example, the median sales to listing price was 90 percent with just four percent selling at the listing price.
- Buyers may think there’s something wrong with the property if it’s been on the market too long, which will create doubt before a buyer even sees the property.
To find out more about listing your home with a Tampa Bay area Realtor and the services I can offer, please contact me here.