When selling a home, the most important marketing tactic is in the list price.

The list price isn’t what a home is worth, but drives traffic and generates interest in your home. A common mistake in determining this amount is pricing it too high, thinking it will give you room to negotiate down.

I have a seller who agrees that the value of their home is around $230,000. Anything over $243,000 would be highly unlikely. Even with this in mind, he decided to start at $250,000 for the sake of negotiation.

This strategy in fact does the opposite for the seller, because there isn’t a buyer to negotiate with. Instead they’re driving buyers away from their home to the arms of the competition. When a home is priced way too high, buyers will not be compelled to take action at all. Instead they are making an offer on the home they see as value priced. (The exception being when a home is more unique, in high demand area, and/or in limited supply).

When pricing a home, think retail. Bargain-priced homes are more likely to compel action.

Another seller I’m working with priced at $218,000 with the goal of selling it for $210,000. We weren’t having enough interest so we lowered below market value to $209,000, which was a compelling price since very few homes sell for under $210,000 in that market. Within two days we had two offers and a contract for $211,000, which was over list. The more compelling the price the more likely you’re to create interest and, possibly, a bidding war.