Price versus Perception

Now I’m going to blog an important question: is it possible to price a house too low? I really don’t know the answer to that, but let me tell you about a situation I recently had with some very motivated sellers.

The house, a really great house in my opinion, was in a prestigious gated community in Los Cabos. When we started out at what seemed to be fair price I got lots of compliments from fellow agents. Then we started dropping the price. At first the reductions got rave reviews, with agents commenting that this was the best value in the community. Of course the market at the time was as close to dead as it gets; so agent comments were about all I was getting. And the price kept dropping, until it was at about 60% of the asking price of similar homes in the same community. And that’s when the comments began to change (and the market began to pick up). What ensued was a virtual feeding frenzy, showing the house way more often than any other listing in town. If there was someone looking, their agent brought them to my house.

“What’s wrong with it?” was now the most frequent comment. The price was so low that it seems that it was being perceived as a fixer. Prospects and their agents were looking for something that justified that low a price in such a nice community. And they found it. Well, sort of.

Now I need to make it clear that NOTHING CHANGED. NADA. The only change from the time I took the listing until it sold was a change in the comforters in two of the bedrooms and the microwave replaced, good things from most perspectives. And there was no difference in the way I presented the house. The only difference from the start of the campaign until the end was price.

Now the feedback I was getting was that the house ‘needed too much work’. Just a general, vague comment with no specifics to be had. When the house did sell it was with a home inspection contingency, something kind of rare in these parts.

So here’s the question: since we know that nothing about the house changed (other than price), did we price it so low that the price actually became a negative? These days in Los Cabos there are so many great deals that we’re all asking ourselves if they are really steals or if the ‘bargain’ prices are our new reality. And now I’m wondering what being the best bargain in town does for prospective buyer’s perception of the property. Hmmm.

Carol Billups is Broker/Owner of REALTY EXECUTIVES Los Cabos. A Certified Home Marketing Specialist, she has enjoyed working with both buyers and sellers for over nine years and still thinks hers is the best job on earth. She is also the real estate columnist for Los Cabos Magazine and the real estate co-ordinator for the Los Cabos Now program on CaboMil FM (www.cabomil.com.mx). You can read more of her articles on http://www.reloscabos.com. You can reach her from the U.S. or Canada at 1-760-481-7694, or in Cabo at 044-624-147-7541.

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© 2010 Carol S. Billups

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