Few words get people more interested in buying real estate than the word “Auction.”
It’s as if the word has been programmed into our subconscious to make us react as if a bargain exists. So why is it that only banks and people selling merchandise on eBay take advantage of this proven sales approach?
The reason I hear most often is – “I can always lower the price of my home, but I could never increase it.”
In reality that statement is only half true. Sure if your home is priced over the market value, you can lower the price. But when your home is priced below the market value, you won’t need to increase the price because competing buyers will do just that.
Before you start shaking your head in disbelief, let’s familiarize ourselves with how banks sell foreclosures (another exciting buzz word among bargain seekers).
When a bank sells a foreclosure, the goal is to sell it as quickly as possible and for the highest price possible.
Surely you have heard of people competing at foreclosure auctions.
Would it be reasonable to assume that the bidding starts at a price low enough to generate bids from multiple buyers? Would it also be reasonable to assume that most of the savvy investors won’t overpay for a home at an auction?
How about the same scenario used to sell merchandise on the auction website eBay? The website is built on the principle that when buyer’s compete, the seller will always win. Why then should it be any different when you are selling your home?
Putting your home up for sale in many ways is similar to an auction.
You list your home for sale, solicit offers and in return, hope people will make you an attractive offer.
The challenge for most people selling their home is, getting over the psychological hurdle of pricing their home slightly below market value … even though they know the strategy works.
I frequently hear people say—“If we get an offer below our listed price, we’ve got no chance at getting a subsequent offer at a higher price.”
Not true! Why you ask? Sellers always reserve the right to decline any offer on the sale of their home.
In reality, the opposite is a more likely scenario, figuring out what to do with all the offers you receive on your home.
The strategy behind creating an “auction effect” on your home is most successfully utilized when the market is in short supply of homes for sale.
In case you were wondering, the current state of the real estate market is one that is in short supply of homes for sale.
Ultimately there will be people that try the opposite strategy, offering their home for sale at an inflated price and eventually negotiating it down.
And then there are those shrewd few, the sellers that know when buyers (not investors) compete the seller will always win and will, in the end, sell their home for more.
Curious to know what effect these sales are having on the value of your home?
Check out the online resource preferred by more Seal Beach residents, www.SealBeachHomeValues.com.
About the author
Nat Ferguson is a fourth generation resident of Seal Beach, Real Estate Broker, past president of the Seal Beach Chamber of Commerce and member of the Lions Club. He can be contacted at 562-645-6501.
