Real estate wisdom tends to agree with verities from other realms and can be a puzzle if you don’t have experience. When you consider the size of real estate transactions in general, it’s logical that it would be hard to keep any truly valuable observation secret for long. Even so, there are exceptions to the rule. One of them is based on a complicating factor—namely, that when a perceptive move seems to be illogical (and therefore risky), people are slow to adopt it.
I call this the Chinese Finger Puzzle Exception. Remember that puzzle? Children love to spring it on their friends and siblings: it’s a simple-looking colorful woven straw tube you are told to stick your index fingers into, only to discover that no matter how hard you pull, your fingers are stuck inside. In fact, the harder you pull, the more stuck they get (children love this) until someone tells you the “puzzle’s” simple solution: push instead of pull. The tube relaxes; your fingers are freed.
When the solution is the opposite of what common sense tells you, that’s a CFPE. The real estate CFPE that can work (but which also challenges logic) can be valuable for homeowners who are listing their property. It’s simply stated:
“Sometimes your property can sell for more by listing below its real value.”
That could sound ridiculous (and risky), but it can result in a big difference in the final sale price. The idea is simple enough: set a plausible but irresistible asking price designed to draw a crowd of buyers who will see the property’s true value and compete with one another to claim it.
It’s an invitation to a bidding competition—especially in a seller’s market. Now, there’s no sure thing when you sell your house, but when you choose this illogical strategy, it’s encouraging to know that you are taking advantage of NAR studies which show as much as a nine-fold increase in the percentage of potential buyers who will look at a property that’s listed under vs. over market value. Another study shows that a new listing’s first two weeks tend to be the most crucial. It follows that listing at this time—during the peak real estate selling season—is aimed at reaching the greatest number of house-hunters. Since a list-for-less approach is intended to attract a large crowd quickly, if ever it’s to be a valuable strategy, the time is now! One prerequisite for this particular CFPE is that the property has undeniably attractive qualities. Another depends on the current state of the market.