In the marketing of homes, we find there are three major levers a seller has to affect the outcome of their sale: 

1. The agent (and team) they assemble; 
2. The presentation (aesthetics and physical condition); and,
3. The price. How one prices their home can have a major effect on consumer psychology, the amount of time the property will spend on the market and the final financial outcome. 

This is why we spend considerable time obsessing over how best to guide our clients’ when it comes to pricing their home, cognizant of the fact that a very small fraction of homes actually sell for their list price.

In the East Bay market, homes are generally priced in 2 ways – transparent and teaser.  

Transparent pricing is just as it sounds, and the home is truly priced for what the agent and seller believe the price will sell for based on a variety of comparative factors.  

Teaser pricing means that the home is priced for attention, and below the price that the market will likely bear. 

So, why do we tend to advise our clients to use teaser pricing? What’s the thinking behind that strategy? How does it affect the results? For most sellers, it comes with a feeling of risk and vulnerability. It feels counter-intuitive, dangerous, and like a leap of faith. 

In our  years of experience watching this pricing strategy work, we find it to be effective for a few reasons.

1. The East Bay market is one that often challenges the practice of considering comparable sales. We all know the East Bay is a unique place to live with rich and diverse architecture, neighborhoods, square footage, climates, terrains, etc…and so in a custom home market it can be challenging  to find two same houses, selling at the same time.
2. East Bay buyers don’t like to be told what to pay. Time and time again, we see houses that price “transparently” struggle. They collect days on market and end up selling with fewer offers and often for less money then they might, dare I say, should have.
3. People want what other people want. When there is competition, there is a sense of urgency and fear of missing out. When you get multiple bids, the home inevitably performs much better than when you just have one. This is an auction mentality. When you know that someone else is engaged in the bidding process, you are more apt to bid higher.
4. When a buyer’s mind is open to possibility, they allow themselves the time and freedom to consider all the decisions that go into a home purchase. Said another way, they spend more time in their hearts. When they are met with something like a high listing price or major disclosure items, they immediately turn their critical minds on. And the small repair or floor plan oddity that would not have been a big deal, suddenly becomes enough of a reason to walk away. 

Consider this example:

There were two Alameda homes on the market very recently that mirrored each other in the most fundamental ways. They were both large, on good-sized lots, in the same school district, with lots of charm and bonus space, and they were marketed within weeks of one another in a similar low inventory climate. Compare the stats below: