Next in our changes in real estate series is best pricing practices.
Today Marcia and I take a look at what you can expect when pricing a property for sale.
René Nelson, Eugene commercial real estate broker
Marcia Edwards, Eugene residential real estate broker
Legislative Changes in Real Estate – Part 7
René Nelson: Marcia, you said something brilliant as we were coming on to the radio. Let’s talk about pricing, because I asked you about how do you hit the mark for listing at the right price, and you said…
Marcia Edwards: What I said is, it’s not based on history, it’s a future event you’re trying to predict, and to do that in this appreciating market, you’ve gotta let the market take care of itself. So what you’re going to do is you’re going to price it below what the market would likely receive based on history, just barely below like an auction, then you let the market push it upward.
René Nelson: And, folks, this is not a game, this is your house, this is… If you’re the seller, this is your money. So Marcia is trying to get you top dollar for your property, and if you’re a buyer, she’s trying to help you win, so your offer gets selected, but there is a strategy here that you have to adhere to. You can’t just come in and think, “Oh, I’m going to lowball, and the seller is going to counter to me.” They don’t even counter any more, right?
Marcia Edwards: It’s that clean, it’s that fast. It comes in and goes. So if you have a property that should sell for 550, I would encourage you to price it about 500 to 525. The reason for that is, it gets more people in the front door. The more people you get in the front door, the more offers you’ll have to entertain and the more competition you can reflect to the other buyers to bring their A game.
René Nelson: Remind me again, when you have multiple offers, do you go back and tell everybody best and final, or do you do an escalation clause? And can you just tell our listeners what an escalation clause is?
Marcia Edwards: Sure, so what I would suggest is when there’s a deadline, you’re giving notice that the highest and best is due on that deadline as a realtor in this market today. So if you say next Thursday at 4:00 PM all offers will be reviewed by the seller, that’ll be your window, that’ll be your one window. So an escalation clause has become really common. An escalation clause is where you offer a price and then you’ll say, “But I will pay additionally up to… Say that 500 I offer up to 550 at 2,500 increments. I’ll beat any competing offer.” So you’re promising to beat what other offers come in beyond that.
René Nelson: And in that escalation clause, if I win with my escalation clause, will you show me the other offer just so I know I wasn’t duped?
Marcia Edwards: They ask for that as a condition of the purchase. I remember as a buyer, you’re proposing that we play this game called escalation clause. The seller can just say, “I’m going to counter you at this price, I’m not going to show you any evidence of anything.” They don’t have to engage in the game, but it is a strategy to not show your hand wide open and say, “Take all my money while it’s here.”
René Nelson: That makes sense.
If you’d like help understanding the true income value of a property that you’re interested in investing in, schedule a 15-minute discovery call with expert René Nelson today.