Derry's Condo Headshot

Derry's Condo Headshot

Monday, July 16, 2018

The Margin Between List Price and Purchase Price

This goes out to the psychology of everyone involved in real estate.

To sellers, pricing correctly is such a powerful tool. For example, I held an open house this weekend for the second lowest price, single family home in Newport Beach. The only reason it's not the lowest is that the lowest priced property is bank owned. As a result, this home has a lot of activity. It seems like all of these buyers are like vultures circling their prey. The irony is that every buyer is waiting for the property/price to drop. The major problem with waiting for the property/price to drop is that when it does, every vulture is now competing for the same prey. This seller has a pricing gap that is too overwhelming for buyers to navigate to the point that they aren't even willing to make an offer yet.

To buyers, take note of this gap. I have several clients who seem to want what everyone else wants, but they have the additional caveat of seeming to want someone else to want what they want first. For example, there is a property now that has gone in and out of escrow. The property is struggling to sell as a result of financing the property. My client has the opportunity to get this property for a fabulous deal, but my client seems to be afraid to make an offer because my client can't understand what they're seeing and their competitors are missing. Some of this is financing. Some of it is the price. I'm doing my best to convince my client that this is the opportunity to be a proactive vulture (going back to the vulture metaphor). You've got to give yourself a chance and make the offer based on the price that you want. You don't necessarily need to make an offer as a reflection of the list price. Opportunities aren't given. They're taken. You can't win if you don't compete.

Takeaway: sellers, price your property correctly. Buyers, don't be afraid to be aggressive with your offers. You'll never know until you try. 

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