In real estate, four pricing strategies by home sellers and their Realtor are in place since Adam & Eve had to go out and look for a place of their own! A side note here, is real estate the oldest profession in the world?
Every seller wants to maximize the amount they receive. They may have an inflated value of what their home is worth because of: getting opinions from un-informed advisors and friends, having an over-financed house, or they have renovated their home to a standard not consistent with their neighbours.
About 75% of the homes on the market are overpriced. These homes sit on the market longer than they should as well. There are two main reasons these homes are overpriced. The seller believes that the house is worth more than the market has indicated, OR, the seller has left room for negotiating.
Priced Correctly At Market Value:
Some sellers understand that real estate is part of the capitalistic system of supply and demand. They have realistically priced their homes based on a thorough analysis of other homes on the market prepared by a competent and knowledgeable Realtor. These competitively priced homes usually sell in a reasonable time and very close to asking price.
Priced Below the Fair Market Value:
A quick sale motivates some sellers. These homes could attract multiple offers and sell fast, and, at or above, the asking price!
As a buyer, do you know which strategy is in place?
Knowing how to get an offer accepted at a price you are pleased with is a skill that very few Realtors have. I hope I have raised your awareness of how real estate value perceptions are determined; a quality representation can save you a lot of time and money.