You’re not selling to everyone. Especially not the cheap ones.
If you spend any time studying negotiation, you’ll run into the concept of anchoring quickly.
Here’s a quick explanation. Humans are not great at evaluating numbers in a vacuum. Whatever number we hear first gets in our mind, and everything gets judged relative to that.
Strangely, the anchoring number doesn’t even have to be related to the subject being negotiated to have an effect. Studies have been done where, before discussion starts, an unrelated number gets thrown out.
Something like the local left fielder’s salary or the price of a gallon of gas.
And the resulting agreements end at a higher price when the higher number was mentioned.
Happens in real estate all the time.
If you’ve ever written an offer on a property, you know the routine, start as low as you can without insulting the seller or making them stop talking to you.
In almost every case, the buyer expects to pay more than the first number they write down.
They want a counter, and the counter will usually drift toward the anchor created by that first offer.
So by starting lower, you finish lower.
Sellers can use this too.
When you put a property on the market, the asking price works like an opening offer. Not a perfect match to a written offer, but close enough that the psychology is the same.
Your asking price sets the anchor on your side.
Obviously you can’t list a $100K property for $100 million and call that strategy.
But you can list it on the high side and shift the entire negotiation upward before it even begins.
Most buyers will start higher if you start higher. And most deals finish somewhere related to those starting positions.
This idea works much better on land than it does on houses. (lucky for me)
Housing has tighter price bands. There are a lot of comparable sales, a lot of similar properties, and buyers who can look at dozens of options in an afternoon.
People can tell instantly when a house is overpriced.
On top of that, almost all housing depends on financing. And financing depends on appraisals. A lender won’t let a buyer stretch very far, and even if the buyer wants to, they often can’t.
Land doesn’t always follow the same rules. Each tract is unique.
Size, shape, elevation, trees, road access, water, and views hit buyers differently.
Something that is just fine for one person can be perfect for someone else.
And if the right buyer (or more realistically the buyer’s wife) decides a piece of land is perfect, the price ceiling gets flexible very quickly.
You also run into a lot more cash buyers, which means the appraisal choke point disappears.
With land, you’re almost making a mistake if you don’t price fifteen to twenty-five percent above what you truly expect to receive.
Notice I said 15–25 percent. Not 250.
A little high won’t scare people off the way it does with houses. And if the right buyer shows up, you might end up selling for more than you planned.
But even if you don’t, the anchoring still works in your favor. Start higher, finish higher.
That’s the point.
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PS – I say on here all the time that if you improve your negotiation skills you improve every part of you life. The best two books I know of (I read them both every year because they are that good) are Start With No by Jim Camp and Never Split the Difference by Chris Voss.
If you’re interested in learning the systems and strategies they employ (ie not cheap tactics you can get them at my Recommended Reading page.
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