by SCOTT VOAK | Special Advertisement

Crash Pricing

How It Hurts Sellers and Communities

When the market undergoes a shift and slows, some agents are caught unprepared. In a hot market, agents can focus on marketing themselves rather than homes. When the market slows down, some agents don’t have the skills or experience to develop a marketing plan and generate market value offers. Correctly marketing a home in a typical market takes between .5 and 1% of the home’s value. Agents who are accustomed to spending $500 on photos, fliers, and a sign aren’t prepared for a typical market. These agents then deal with frustrated sellers demanding explanations.

There are some options. Many get out of the business. Some apply themselves, learn how to market homes, and put forth the effort and money to do so. Some resort to the age-old tactic of blaming the price.

The worst case of this is called crash pricing. It’s when a home is listed for 20-30% under market – often after the same agent has been unable to sell it near market price. A $150,000 drop on an $800,000 house gets a lot of attention. Offers pour in, and the house goes into escrow within a week. The problem is that the seller rarely gets market value – after all, you aren’t attracting people who want to live in the neighborhood with this activity, you’re attracting people looking for a deal, the kind that don’t pay market price. The seller typically loses money.

So does the community. Online valuation sites consider the prices of local homes for sale to value the neighborhood, so the low asking price doesn’t help the neighbors’ value. Also, legitimate buyers see a house priced well under market and don’t see the sales price for 30 to 45 days when the home closes. What is the real price? Is there something wrong with the neighborhood? Sales activity slows due to uncertainty, and then another desperate seller crashes the price – pretty soon values trend down.

If you want to run a real auction for your home, there are other ways to do it. My preferred way is to price it fairly, do a ton of marketing, and bring in multiple qualified buyers at the same time. But, if you really want an auction, there are legitimate auction companies that market homes. They don’t do it by crash pricing and they don’t bring down neighborhood values.


re_voakauthorseal Scott Voak, MBA – Broker

Managing Partner
CalDRE #: 01153157
16710 Bernardo Center Dr.
(888) 311-6311