A lesson in pricing

Dated: April 2 2022

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In strategy talks about putting a property on the market, I’ll sometimes hear clients suggest that we list a house for the highest price we might hope for—with the assurance that we can always reduce the price a few weeks later. My experience with open houses over the last three weeks is a great example of why that’s a less-than-bright idea, even in the current sellers’ market.

Open house #1 was a beautifully remodeled 3/2 single family home in Agoura Hills. Its location and floor plan were both attractive, and its aggressive $929K list price brought buyers in so quickly I couldn’t count them all. Bidding on the property raised the price well over $1M, and the house was in contract in only three days.

Open house #2 was also beautifully remodeled—a Newbury Park 2/2 condominium in a good neighborhood, listed at $540K. The condo development is still under a city-administered affordable housing ordinance, so in order to purchase, buyers must occupy the condo and their household income must be under a specified moderate level. $540K would set a new price record for units in the development, but no offers were submitted after three weeks on the market. No one showed up for my Sunday afternoon open house, and the property is still waiting for its buyer.

Open house #3 is this weekend at a beautiful large 4/4 home in a gated Moorpark community. It was listed about three weeks ago at a price about $40K above the highest comparable sale. The sellers reduced the price by $50K this week, after the original price failed to deliver offers. Today, it’s another lonely open house.

Agents and buyers are constantly on the prowl for fresh listings, but they are very price conscious. If a new listing is priced above market value, it won’t attract buyers. If the listing price is reduced a few weeks later it’s usually too late, because nearly every active buyer is concentrating on freshly-listed homes.

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DAVID DUNLAP

As a residential real estate executive with an extensive background in corporate marketing, I am able to apply unusually strong skills in marketing communications, e-marketing, strategic planning and ....

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