Boom! 5 Reasons Why Pricing Too High Backfires
There is a theory that you should price your vacant land well above what it is worth so that you have room to negotiate. While that may have been sage advice at one point in time, it is no longer a wise decision. In fact, in this day and age, real estate is always priced "tight," meaning it is priced very close to the actual value. In fact, depending on the market, many parcels sell for 95-99% of list price.
1. The "Newness" Window: When land is listed on the MLS (multi-listing service), it pops up in the saved searches for many Realtors and their buyers. If priced right, there is often a flurry of showings as buyers want to be the first to see the piece of property. If overpriced, however, the listing will linger. There will be no rush because savvy buyers already know what a fair price is.
2. Low Ball Offers: If overpriced vacant land receives an offer, it will more often than not be a lowball offer. Buyers are curious how low you will go and will throw out offers well below the value of your land just to see what you will do.
3. Search Price Ranges: Buyers search for land in price ranges, usually in $25,000 increments. For example, someone approved to purchase land at 237K would tell their agent to pull up everything meeting their criteria that is between 225K and 250K. If your land is comparable to those lots, but overpriced at $262,000, no one will even see it.
4. The Difficult Seller: When you are priced too high and stay too high, other agents perceive you to be the "difficult" seller. They assume that your agent has tried to steer you to a list price more in line with the comparables and you refused. As time goes on and you are still listed too high, they begin to wonder what else you would be difficult about if they end up in a transaction with you. As a result, they steer their clients away from your property to avoid possible future headaches.
5. What's Wrong: While vacant land takes longer to sell than houses, lots that do not sell within the average days on market for the area will create curiosity. As your lot continually comes up in their searches and lingers on the MLS for weeks or months, people will begin to assume that something must be terribly wrong with it. In real estate terms, your listing will grow stale.
Vacant land that is priced right from the beginning will sell, sell fast, and sell for more money. Your licensed real estate agent can help you price your lot so that it is positioned to sell.