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Needs-Based Pricing
Needs-based pricing describes a seller's asking price that is based on getting required funds to cover a mortgage, pay off renovation costs or purchase another home; this type of pricing differs from most pricing strategies based on market value. This pricing model can place the asking price above or below market value. If the seller has a mortgage above the value of the property, then the asking price may be above market value. If the seller wants to get rid of the property and just recoup costs, the asking price may be below market value. If a seller has to cover a $250,000 mortgage, he or she may set the price at $260,000 to cover mortgage and costs. However, the market value of the home may only be $200,000; in this case, needs-based pricing posits the asking price above market value.