How to Determine Your Asking Price in the Bay Area Housing Market
So, you want to sell a house. You discuss your asking price—sometimes called a list price—with your real estate agent to determine the ideal amount to request. Often, discussing the list price is a topic which can result in serious discussion, even arguments.
From the home seller’s point of view, it’s generally assumed that the asking price should reflect the amount they want to be paid for their house. In several markets, a seller may decide his house is worth $1 million and consequently list his home for at or just above a million dollars.
Don’t. Do. That.
Why?
In the Bay Area housing market, the transaction price of a home is always higher than the asking price. While this is not the same in other parts of the country, the Sold/List Price Ratio for the Bay Area is statistically above 100% in most housing transactions over the pact few decades.
The buyers in these areas are used to transaction prices being higher than the asking price, so the seller may think, “If my asking price is $1 million, then the buyer will bid $1.05 million, or even $1.1 million!”
It’s not that simple.
Most buyers are using a buyer’s agent who will provide them with a comparative market analysis which equips them with the value of the house. If they know the house is worth $1 million, why then would they pay more?
Consider also the steps involved in buying a house. Several buyers utilize search software such as Redfin, Zillow, or their agent’s program to sort through their home search and find the best fit for them. One such way to search is to filter by price, which makes setting an appropriate asking price even more important.
Although a buyer might have a budget of $1 million, knowing that houses will sell above the asking price, they may limit their search to homes that are listed at $950K or lower. This will eliminate the home listed at $1 million from the search, and the seller has lost a potential buyer.
The solution
Consider your asking price as a piece in your marketing, and list lower to capture the higher-paying buyer.
If you have purchased a home in the Bay Area, you have most likely experienced the frenzy and irrational activity of a multiple-buyer scenario. Sellers wish for and anticipate this scenario as they sell their home, but how do they attain it?
The answer is simple: Lower the asking price below the ideal transaction amount.
If your target price is $1 million, list your home at $950K. As we discussed, a large number of buyers will expect an asking price below the selling price, and you will attract buyers with budgets as low as $950K while also attracting your higher-paying buyer. You receive the lower offers, and those become leverage for countering and creating a buyer frenzy. Your potential buyers experience the fear of missing out and a manic bidding contest begins to win your home. In their determination to beat out the other buyers and win the bid, you will very likely see buyers put in final bids above your asking price. That $950K asking price has garnered you a $1.08 Million home sale!
Disclaimer: Remember, when formulating an asking price, analyze the specific area first. For example: from Burlingame and Millbrae down to Menlo Park, Palo Alto and Los Altos, most people set an asking price just below the expected selling prince. In Mountain View, Sunnyvale, Santa Clara, and other South Bay Area cities, the asking price may be set much lower than the market price. Contact a realtor for best selling strategies and an optimal asking price.
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WHAT’S THIS BLOG FOR?
Before I started my career as a real estate agent, I found it quite difficult to find informative articles or websites that provided accurate information catered towards buying and selling houses in the San Francisco Bay Area. Yes, there are some out there on REDFIN or Zillow, but those are not catered specifically towards the San Francisco Bay Area. Sometimes, even tips and facts regarded as common knowledge aren’t applicable and outdated from a Bay Area perspective. My original intention of starting this blog, was to help shed some light on the seemingly inscrutable real estate market. As a real estate agent who has been practicing for several years, I wanted to provide accurate and relevant information to those who might be interested in buying or selling a home.
If you’re curious and want to learn more about buying and selling in the San Francisco Bay Area, then this website might be a good starting point to gain some insight!
WHO AM I?
My name is Chiuho Lin. I first found my calling for real estate in 2015, while I was looking for a new home in the San Francisco Bay Area. I found myself inexplicably drawn to this profession and after meeting hundreds of real estate professionals, I made the decision to become a real estate agent myself. To me, being a real estate agent is rewarding not only because I love meeting new people, but also because I have the privilege of helping them find their new home. A home is an essential aspect of people’s lives where families make happy memories together. I am so glad that as a real estate agent, I can help make their vision a reality.
WHAT IS MY PROMISE?
If you are interested in buying a house, as an agent I can promise you that I will be present in all stages of the buying process. This includes everything from consultations to address all your concerns, investigating real estate to find a home that suits all your needs, visiting the houses, providing insights on the neighborhood, assessing the current conditions of the homes that may require additional attention, read various reports filled with technical jargon, to helping you understand contracts. I ensure quality care and commitment in the entire process from start to finish.
If you are interested in selling, then the process would start from an initial consultation, to price assessments, market analysis, repair advice, time-to-market recommendations, staging assessment, style selection, housing listings, posters, social media promotion, marketing media selection, follow-up on house delivery. Once again, I will be active and present in the entire process to make sure everything goes smoothly.
As a professional, I take pride in my work ethic and ensure the utmost care and consideration while working with all my clients. I’d like to consider myself a trusted adviser to ensure a phenomenal experience throughout your buying/selling process. With that being said, if you ever need a professional consultation or assistance with anything – for example, gardening/landscaping, property manager property lawyer, paint master, decorator, roof repair master, loan broker, registration accountant – please feel free to reach out! I am genuinely passionate about what I do and hope that I can help share my knowledge with you all.
