Here on the Monterey Peninsula, we encounter situations where we are asked to price a home with very few relevant sales. This is one of the reasons why pricing luxury properties in our market is such an art, and requires thoughtful strategic planning between the listing agent and seller.
Pricing Luxury Properties
Three strategies for pricing luxury properties are:
- Pricing high to test the market
- Pricing in the middle of the range to generate interest and affect a sale
- Pricing on the lower end of the market value range to encourage multiple offers from real buyers
It’s important to note that in the current market, buyers are being very discerning about their offer prices and are doing extensive due diligence. This is quite different from the Silicon Valley reports we are hearing where buyers are overbidding with minimal contingencies and due diligence. It is best to present a luxury home with inspections done up front. This is a small investment that provides an interested buyer with confidence to move forward because they know the details of the home. It also gives the seller control of the price by presenting inspections and disclosures with the list price.
When you have few available relevant properties to help determine the price, expand your search to other neighborhoods and consider the value the property brings to a buyer. Identify the buyer demographic – who is most likely going to buy this property based on all of its redeeming features? Is it a high earning family looking to raise their kids in a great school district? Or a tech couple looking to get escape from the Silicon Valley? Consider what price your ideal buyer demographic would be willing to pay when compared with a broader scope of the local market.