Why Overpricing Your Property Can Be Fatal
Our region has a lot of vacant commercial property on the market, but it still can be hard to find that perfect space. When pricing the space, your real estate professional is your best resource.
Sometimes, owners think that initially setting the square foot rate high is a good strategy. This can be problematic for the following reasons:
Initial excitement. The best time to get attention for your property is when it is first listed. People in the market for your type of space will already have a good idea as to the market price. If you’re space is priced too high, it may be quickly dismissed as an option.
You may appear “out of touch.” While most people understand there is a negotiation element in a lease or purchase, overpricing may give you the perception of being unrealistic or overvaluing your property. Then your property can get a stigma around it, sit on the market for quite some time, and you will have completely blown your opportunity to generate enthusiasm around it. Even if you start lowering your price over time, you’ve lost your original prospects.
Below market might be a strategy: In a hot market, when property like yours is in short supply, you might create a bidding war. Then investors/buyers could compete to outbid their competitors, getting wrapped-up in a frenzy that can deliver you a much better price, similar to what happens once people begin bidding against each other at auctions.
This isn’t the position that you want to be in, so whenever you’re putting your property on the market, make sure that you price it in a manner that will get people excited about buying it!