Priced for drama or priced for sale?

It’s no secret that much of L.A. real estate sells for more than the asking price.  And it’s no secret that Realtors sometimes price their properties for a little less what they will certainly sell for in order to quickly get offers.  The sales price of a particular property – what qualified buyers are willing to pay for a property, along with availability of funding, comparable home sales and property condition – usually winds up being exactly what the home is worth in the current market.

But how much is too much when it comes to underpricing? Recently, I have been looking for properties for clients on the popular eastside of L.A.  And I have seen places deliberately priced for more than $100,000 under what they will eventually sell for.  Yup, One. Hundred. Thousand. Dollars. Less.  The Realtors know it.  The sellers know it.  A lot of buyers don’t know it, though, and get excited about the prospect of buying in their desired neighborhood. A lot of buyers’ hearts get broken.

Why is this extreme underpricing necessary? All it does is disappoint many, many potential buyers who will never be able to really afford the particular property.  It wastes everybody’s time.  And it creates a lot of unnecessary drama around the showings and the marketing process.  Who benefits from this approach? In a hot market, the sellers are going to get the best price the market will bear anyway.  Is it bragging rights? Do the Realtors and sellers need that much attention?  C’mon, guys; let’s try to bring some fairness to a process that’s already pretty unpleasant.