Testing a Bay Area Home’s List Price

Determining the optimal listing price for a home in the bustling Bay Area market can significantly how much you will get for your home when it sells. With the unique dynamics of Silicon Valley real estate, setting an appropriate listing price is both an art and a science, requiring a deep understanding of current market trends, comparative property values, and the intrinsic worth of a home’s features and location.

This article is designed to help homeowners get some insight on how they can test the price of their home, to make sure that they are getting the best price possible when they go to sell. It outlines key considerations for testing (and ultimately setting) the price of a home in the Bay Area, which is something that many homeowners are interested in doing. That’s because pricing your home for sale can feel like one of the trickiest parts of the selling process -and it is absolutely one of the most important, which is why so many homeowners are interested in testing their Bay Area home’s price.

The Problem with Testing a High List Price

I’m going to level with you:  the reality is that setting a high price to “test the market” often backfires. You might be tempted to list your property for an aspirational price, thinking, “Let’s see if I can get $3 million for this home.” While this approach sounds tempting, it often leads to more headaches than offers. Here’s why and what you should do instead.

When a home sits on the market for too long, it starts to collect “days on market” (DOM). Buyers notice when a home has been sitting, and the longer it’s listed without an offer, the more people begin to wonder if something is wrong with it—even when there isn’t.

This perception can hurt your chances of selling at your desired price. Instead of generating interest, you’ll end up attracting lowball offers, or worse, no offers at all. Buyers see a home that hasn’t sold and assume it’s overpriced, so they either avoid it or come in with lower-than-ideal offers.

The Smarter Approach: Start Low and Drive Competition

A more effective strategy is to start with a competitive, lower price to generate maximum interest. It may seem counterintuitive, but listing at a lower list price often creates a bidding war that drives the final sale price well above asking.

When a home is priced attractively, it will spark excitement among buyers, prompting them to schedule showings, attend open houses, and, most importantly, make offers. Multiple offers put your agent in the driver’s seat, allowing them to negotiate the best possible combination of price and terms.

I recently used this strategy on a unique property. We listed it at a slightly lower price than what we believed the market would bear. As a result, we had dozens of people attending open houses and multiple offers—most well above the asking price. Buyers were eager to compete, and we had the leverage needed to secure not only the highest price but also the best terms.  We did this by getting buyers to compete against each other, revealing who could offer the best combination of price and terms possible.

Change Happens

No Obligation to Accept Offers

One of the best parts of this approach? You’re under no obligation to accept any of the offers you receive. If the highest offer doesn’t meet your expectations, you can simply decline it and reassess your options. The beauty of this strategy is that you’ll have concrete data on what exactly the market is willing to pay within a short period—typically just one to two weeks.

You may be worried that you won’t end up being able to negotiate a price that meets your goals or needs for the sale – and certainly, there is that risk.  But you have the same risk by testing a higher price – except it will take a lot longer to get the message that your price is too high, and you won’t know exactly how much fair market value is today.

However, by starting with a low price, attracting multiple offers, and with skillful negotiating from a position of strength, you will probably be surprised (and delighted) to find out just how much your home is actually work – and it could be much more than you’re hoping for. Not only that, you’ll likely also end up with really great terms – such as a quick close, long rent back, and with a buyer who has no contingencies for purchase.

Concerns over the Low List Price Strategy

Some sellers will still have concerns about the low list price strategy.  One of the big concerns I hear is, “What if I don’t get any offers at that price?”

There may be situations when a low list price fails to garner any offers – for example, if there is a geopolitical event akin to 911, or a big earthquake like in 1989, catastrophic natural disasters, etc.  In those cases, you may well want to pull the home off the market and try again in calmer seas.

However, absent any “black swan” events such as these, if you are in a typical real estate market and your home is failing to attract offers even at what you believe to be a low list price, there is a very strong likelihood that even the “low” price you have set is too high.  In this case, you can continue to market the property at that price, or pull the cord and make a dramatic price cut to an even lower price, to foment the multiple offers and competition you’ll need to drive the price up to whatever the market will bear.

Setting a Higher List Price Later

Many homeowners have a concern that if they try a low list price and the home does not sell for a price that they can accept, that they will then find it difficult to sell the home later at a (significantly) higher price.  That’s because a home’s price history is often shown on the major real estate portals like Zillow and Realtor.com.  I totally understand the concern, and it is a valid one.

The truth is, if you set a low list price, fail to sell the home, and then quickly turn around and set a higher list price shortly thereafter, you are not likely to meet much success with this tactic.  However, I think most sellers would be concerned with trying a higher price in a different season – say, six or nine months down the road.  In this case, after that much time has past, the market will have naturally changed.  It may well be much stronger at that point than it is today, in which case, you may find a buyer open to paying that higher price.

Regardless of how much time will have past, these real estate systems keep records going back many years – and that low list price will remain visible for some time to come.  But if you really are in a different market dynamic, I can tell you that it really won’t matter.  That’s because Bay Area and Silicon Valley real estate prices are determined by one thing, and one thing only:  the law of supply and demand.

Buyers will not care that your home was priced 10-20% lower six, nine, or twelve months ago.  They really only care about what is the best deal they can get on a home today, that has the features and benefits they need, in an area they want to live in.  True:  the may notice at some point the pricing history, but any “discrepancy” can easily be explained:  that was then, this is now – if you want to buy the house, let’s talk turkey and hammer out a price that is reasonable for both buyer and seller.

A Smart Alternative: Compass Private Exclusives

If you prefer a smarter approach to testing your home’s value, consider the Compass Private Exclusive program. This option allows you to market your home privately through Compass’s proprietary platform and agent network, without accruing days on market or broadcasting your listing to the general public. It’s a discreet way to gauge buyer interest before officially listing.

With a Compass Private Exclusive, only top Compass agents and their clients will see your property, giving you access to highly qualified buyers without the noise of the open market. You can even opt to display your home without a price, leaving room for negotiation without the pressure of buyer perception.

What’s more, you can also adjust the price (up or down) without that appearing on any real estate portal, or even on compass.com itself.

At any time, Compass has hundreds of Private Exclusive listings available for sale throughout the greater Bay Area.  Many homeowners prefer to sell their home this way, because in addition to testing the price, it offers a level of privacy and exclusivity which a sale on the open market just will not allow.  Competing brokerages have similar programs, but in the Bay Area, the size and quality of the Compass agent network puts all others to shame.

If you want to test a price for your property quietly, without the risks of publicly accruing days on market and potentially devaluating your property, listing as a Compass Private Exclusive is a great way to go.

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