(Gideon Fountain, writing for the vacationing Christopher Fountain…)
This piece of junk–er..treasured artwork, sold at auction last month for a tad-bit more than the Sotheby’s Auction House estimate of $19.2-28.8 million. Bidding began at $12 million. Bidding did NOT begin at $200 million. This principle, negotiating UP, not down, extends to ALL areas of the market place with the possible exception of dealing with a street-peddler on the streets of Cairo. As hard as it is for some to grasp, in real estate, you get more by asking less.
Let’s say you take my word for it; you call up your broker and say “Mabel, Gideon Fountain says we should under-price our home. Let’s do it!” Mabel takes a look at recent sales and comes up with an asking price of $2,300,000 (instead of the $2,995,000 that she was going to suggest). It goes on the market, and out of 12 showings you get 4 bids ranging from $1.995 to $2.2. To each of these you respond “Thanks, but we’re sticking to this price.” At this point, at least ONE of those bidders should step up and say “Fine, we’ll take it.” or, better yet, all FOUR say this, in which case, the REAL bidding begins!
But suppose none of them come up? Well, then you’ve learned something important, namely, you were not as “under-priced” as you believed. Meanwhile, at least you have bids! Your competitors, with all the padding in their prices, are still waiting for ONE bid, let alone multiple. Tired phrases like “We’re just waiting for our price”, or “All it takes is one”, or “Why aren’t you advertising my house more?” are repeated endlessly.
The study of statistical analysis teaches us that if you want to know what 1,000,000 people think, you have only to ask 1,500 of them. House buyers are the same except you don’t even need 1,500 of them. If 20 ready-willing-and-able buyers are brought to your house and none of them bid, you’ve over-priced it. “The market” has spoken.