On February 6, I blogged about The Art Of Pricing Property. Shortly after posting this piece, I was perusing my friend Noah Rosenblatt’s blog, Urban Digs and noticed that he was a step ahead of me (actually a day ahead of me on February 5) when I read his post Pricing Your Way to a Sale. What’s my point? Well, it’s no secret that writers and producers are using the blogosphere as an additional means of generating articles for their respective mediums. In fact, I have been contacted by many to further discuss some of my blog topics on news programs or in newspapers or trade magazines. So I can’t help but wonder if Teri Karush Rogers of The New York Times didn’t get the idea for her Psychology of Pricing article from the blogosphere. Maybe not from me or Noah, but perhaps from any number of other intelligent bloggers out there who have so much to offer in terms of solid information and insight into an often confusing marketplace. Rogers’ angle is a bit different in that she approaches the concept of pricing as a psychological endeavor.
IN a market where buyers and sellers circle one another warily — each certain that he or she is being taken advantage of, no matter what the conclusion of a deal — the asking price of a property is rarely a straightforward reflection of comparable values. While comparables may be a starting point, the price at which a seller offers a property is often also based on wishful thinking, propaganda and ploy.
Buyers, in turn, parry by deconstructing the price. They aim not merely to assess a dwelling’s fair value but also to plumb a seller’s bottom line and vulnerabilities. How a price tracks with similar properties, how large and hasty any reduction is, and even how parsed or rounded a number is — all these are grist for concluding, rightly or not, whether a price is firm, desperate or a sign of painful dealings to come.
I absolutely agree that there is some psychology involved in pricing and in the negotiation process between buyers and sellers. That said, much like the therapist who over analyzes every aspect of his/her life and everyone else’s for that matter, the buyer or seller could also make to big of a deal about what a price "means." Particularly in a marketplace with so many unseasoned professionals who will tell a seller whatever they want to hear to lock up an exclusive listing. Remember that pricing is indeed an art that is supported by some scientific means. It’s imperative to interpret market data properly and to select a price in the most objective manner possible. All the rest is psycho-babble.