When sellers are thinking it’s time to sell their home I find they always ask the same question. How much should I pad the list price to account for negotiations? This is a valid question and certainly worth considering. Keep in mind that every deal is different because of market conditions, goals of the seller and how desireable the home is. Here are some thoughts to keep in mind:

  • Traditionally buyers will try to negotiate something off the price of the home and assume most sellers have some room to give. But this isn’t an absolute and not for every single home. There are exceptions, especially for a home with multiple offers in a sellers market.
  • If you want to pad the price the question is how much? The more you pad it doesn’t mean the more room you have to negotiate. What it means is you will have fewer people interested in your home. If your home has a market value of $200,000 and you decide to list it at $230,000 to you can have room to give you will likely just price it high and drive buyers to other homes.
  • If you price it below market value you may actually drive up the price above list. I saw a bank owned home that was listed way below market value at $239,000 and was in contract for $265,000 because the list price was so far below market value they created an auction environment and the price was driven upwards.

When it is time for you to list your home and select a list price remember that the list price is only a marketing tool. It drives interest and traffic to your home. The higher you price it over market value you will be marketing it to the wrong pool of buyers and driving traffic away from your home. The further you price it below market value the more likely you are to obtain multiple offers and likely drive the price over list. Focus on the list price that obtains your goals and makes your home compete well against the other homes on the market. If you do this correctly the padding of the value will take care of itself.