Seth Godin writes one of the most popular blogs in the world and has written 20 best-selling books. I’m one of the 1,000,000 people who read his daily blog, which is usually about business and marketing. This one had a rare reference to real estate and really inspired my thinking.
Just last week, an agent in my office listed a condominium that, in my opinion, was priced 25% below market value. It was perfect for my buyer. I explained my opinion of the value to my client and reviewed the comparable sales. We wrote an offer about 10% above the asking price. After 3 days, there were 11 offers. We increased our offer and my client was the lucky winning bidder. He is purchasing the property at about 25% over the asking price. Is he overpaying?
Last month, a few days before one of my listings went live on the MLS, the owner was concerned we had underpriced it. I explained how I arrived at the list price but assured him that if it was underpriced, the market would tell us its true value. Within 2 days, we received 3 offers, all 5% over the asking price. Is the winning buyer overpaying?
It is very important to understand the difference between the asking price and value. I love Seth’s notion about asking price being an “anchor” and a “starting point.” Working with an experienced agent who knows the difference between list price and value is the key to succeeding in today’s competitive real estate market.