Pricing Your Home For Sale: It’s NOT Everything… Well, It Kind of Is

A crash course on how to list a home for sale and, as a buyer, understand how to establish real value.

By: David Higgins, Founder + Realtor

 

Competing in the Oakland Market

Competing to win a home here in Oakland comes with a learning curve. As a 25-year seasoned veteran of the process, I can tell you first-hand that our market differs from many others in the way homes are priced for sale.

Our local pricing strategy is so deeply embedded into residential real estate that it’s hard to alter or change, even if one wanted to. If you or someone you know is looking to buy a home in the greater Oakland area, here are some must-know details that surprisingly many agents don’t seem to have learned.

 

Transparent Pricing vs. Non-Transparent Pricing

Transparent Pricing: Pricing a home at what the agent thinks is its real market value.

Non-Transparent Pricing: Pricing a home under its real value in order to attract more buyers and create competitive momentum.

In many of the finer neighborhoods of Oakland, Piedmont, and Berkeley, agents may list homes 30% or more under the expected sales price. While this may seem crazy, the rationale is rooted in a long-practiced strategy that has taken on a life of its own.

In a nutshell, the process works like this:

• Price the home low
• Attract a ton of interest based on the low price
• Set an offer date
• Receive multiple offers competing for the home
• Allow the competition to naturally elevate the home to its highest value

That is the simple version. In reality, there are many layered strategies:

• All inspections and disclosures must be complete before listing so buyers have the full picture.
• The listing agent must keep interested agents informed about activity and interest levels.
• The home must be exposed long enough to reach all potential buyers.
• Personally, I prefer two weekends of open houses with an offer day the following week.

 

Why Not Change the Strategy?

Agents have tried to move away from this “low price” strategy, but the results haven’t been favorable.

During COVID, ethical concerns were raised about pricing homes too low. Buyers who couldn’t actually afford them were touring, risking unnecessary exposure. However, to the best of my knowledge, homes that were transparently priced during that time did not fare well.

So why is this strategy still so entrenched?

1. Buyer Expectations

Buyers have been mentored on how this system works. They search with price ceilings below their actual budget.

Example: A buyer with a $2,000,000 budget might cap their search at $1,650,000.

If an agent lists a $2M home at its real value, many qualified buyers never even see it.

2. Perception of Transparent Pricing

If a home is priced at real value, buyers and agents often assume the seller expects 20 to 30 percent more, creating confusion and hurting the listing.

3. Shift in the Search Process

With buyers now in control through search engines and automated alerts, many agents simply wait for buyers to bring them listings. Since agents aren’t actively leading searches anymore, strategic pricing is more important than ever.

 

For Sellers: Why Pricing Matters

As a seller, it’s crucial to understand the importance of pricing strategy. Pricing isn’t everything, but it kind of is.

Proper pricing is based on multiple factors:

• Location
• Topography
• Overall condition
• Time of year
• Interest rates
• Macro-political conditions
• Unique attributes of the home

 

For Buyers: Why Value Is More Than Just Comps

As a buyer, once you find a home you love, you often only get one shot to win it.

If your agent doesn’t understand values and guide you properly, you will likely lose the home you’re competing for. Value isn’t as simple as pulling the last comparable sale. Every home has nuances.

Unfortunately, I see offers come in all the time where buyers miss the market by $100,000 or more because their agent failed to advise them correctly.

If you’re a buyer looking for direction, check out our Home Buyers Guide.

 

 

Ready to Sell Your Oakland, Piedmont, or Berkeley Home?

👉  Connect with Cush Real Estate to time your sale perfectly and maximize your results. Contact us today.

If you’d like  proof of concept, see the Cush Home Sales Performance Report

Curious how timing plays into this? Check out the best time to sell your home in the East Bay.