Underpricing Draws Immediate Action

By Dave Fratello | October 7th, 2015

You want to sell, or maybe have to sell quickly to make something else happen.

So you want to get it done, but not leave money on the table.

881 3rd Street Manhattan Beach CAMaybe try underpricing. They just did at 881 3rd St. in the Hill Section, and closed a sale in less than a month.

List price: $4.000M.

Sold price: $4.500M.

The tactic might sound scary.

How will you ever know how much money you could have made if you don't put a big, fat price tag on it?

So here's the question: Do you trust the market to work?

Experience seems to show that competition brings you to market level quickly.

We'll often counsel sellers that if we can get 2 or more bidders, we'll find the right price quickly. But that's the goal for pricing near market level.

881 3rd Street Manhattan Beach CAPrice way under market, and it's like waving a brightly colored flag and saying "come get it." There's a "leap of faith" aspect to it, but if you present a compelling bargain, you should be able to have buyers compete to set the price.

At 881 3rd, it's not only striking to see their (apparently successful) use of the underpricing tactic. It's even more remarkable how much the sellers' opinion changed on their own property here.

Back in May, they tried for almost a month to get $5.450M. (You could say that they did try the approach of "put[ting] a big, fat price tag on it" before underpricing.) Then the listing quit, amid talk that it'd be back next year.

So at some point, the sellers really believed in a $5+ number for their house.

Then they listed for $4.000M.

The market now has said that first listing was overpriced by $1M, while the new one, with the really scary price so far below the first one, was underpriced by $500K.

On the second listing, the total time spent arguing about price: Near zero.

Time between hitting the MLS and closing the sale: 28 days.

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