Are you guilty of ‘warehouse pricing’ when you make an offer?

When you are making an offer for the first time, you are nervous. That is to be expected. You certainly don’t want to make a mistake and you may feel like all your friends and family and going to evaluate and judge your decision and have an opinion on whether you paid to much or too little.

You certainly don’t want to come out of it looking stupid. At the same time you do not want to miss out on the home you have just fallen in love with so you go through this internal battle of deciding exactly how much you are prepared to offer. Usually the houses in our market aren’t priced which doesn’t make this process any easier.

It is one of the most stressful events you will ever experience in your life.

The Home Buyers Constant Internal War…

The fear of missing out vs. the fear of paying too much.

When you end up in a competitive offer situation, the stress ends up being amplified as you now have a deadline to decide by and worse still – someone else is trying to take your dream home away from you (often multiple people).

At this point it is common for buyers to make a big rookie mistake and come in with an offer price just below a round figure eg. $399k (or $349k / $299k etc). Why is this kind of number chosen? This is the point of compromise at the end of the internal battle…

“I really want this house. Ideally I would like to pay $380k for it. I think it’s worth $400k absolute screaming tops though. I really wouldn’t pay more than $400k for it. If someone else does, they can have it. Good luck to them…”

Sound familiar?

In this scenario you have to see the $400k number for what it is – a psychological barrier, over which you don’t feel comfortable.

The problem is that this works the opposite way for a seller. An offer at $400k looks so much more attractive than an offer at $399k. You can make your offer 10x more appealing with what is, in the scheme of things, a very small change.

If a home is worth $399k then it is worth $401k. That’s an increase of 0.05%.

If you can build up the stomach to make offers slightly over the round figure limit in your head, you will instantly distance yourself from most of your competition and dramatically increase the chances of having your offer accepted.

This works even if you are lucky enough to be the only one offering.

Note: The same principle applies for any round figure, like $350k (eg. offer $351k instead of $349k)

Bonus Tip: To make your offer look even more appealing, write down $399k then cross it out and write $401k and initial the change.

Why $401k instead of $400k? An even number looks like it has been plucked out of thin air and makes a seller think you must have more money. An un-even number shows that you are really pulling out all the stops to buy this home, you have seriously considered your offer price and you are putting in that little bit extra to show you really want it.

This looks great on paper and shows the seller you have pushed yourself out of your comfort zone.


“In the middle of difficulty lies opportunity.”
– Albert Einstein

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