If you are a real estate agent in Orange Beach, Perdido Key or Pensacola Beach you are likely asked, “How should I price my home?” That may sound silly to you and you may be thinking not too high, not too low, just right… Right?
Pricing a home is harder than it appears. There’s always a little more strategy to it than you would think, and one very big factor always comes into play: market conditions.
Home prices are up. Mortgage rates are low and housing supply is stretched thin. It’s safe to say we’re in a tight market. In this case, history tells us to price low and spark a bidding war, but REALTOR.com‘s recent study suggests pricing a home higher might end up selling even higher.
The study performed by the Journal of Economic Behavior and Organization relates it to a physiological tendency called “anchoring.” For example, if we find jeans with an $80 price tag marked down 20%, we think it’s a steal even if another store sells jeans at $60.
It’s an interesting theory, with some caveats of course, but in the end up it’s to the seller.
