Pricing your home is one of the most important decisions you will make when selling it. Your asking price becomes equivalent to naming a starting point in negotiations, so getting this right can set up an opportunity for success that might otherwise go unnoticed or unappreciated by potential buyers who come across what they think are too-high prices even if those same homes are well priced!
To help prevent any surprises during a buyer's home hunt (and perhaps even entice more buyers), here are three common strategies:
Strategy #1: Price Below Market Value
Pricing low can be an effective way to generate interest in your home, with the hopes that multiple Buyers want to make offers on it. You set up this "bidding war" by setting the price at which you will sell - usually 5 or 7 days after the listing hits the market (depending) so that many people are interested when they hear about its availability!
This strategy doesn’t always work. It's most effective when there is an under-supply of your type of property on the market, and houses in hot neighbourhoods tend to succeed using this pricing method (although they also need more than one offer). But, be careful because what if no one shows up at "offer night,"?
To be perfectly honest, I think it’s also unfair to the Buyers. We've seen so many of them get disillusioned with real estate because they bid on a home that was way out of their price range and then had regrets once the Seller ends up accepting a price they could never afford!
A great real estate agent should always guide their buyers in understanding exactly how much the home is worth before getting emotionally attached in any way shape or form.
The price you home low and position yourself for a bidding war strategy can be effective, but Sellers really need to weigh the risks and benefits of going this route with a real estate agent who truly understands the market and neighbourhood.
Strategy #2: Pricing Your Home Above Market and Negotiate
Overly ambitious Sellers are the ones who price their homes above market value, but there's no harm in trying. With 3 important things to keep in mind though.
1. A lot of Canadians don't like negotiating and will walk away from a home rather than risk offending someone by putting in an offer lower than what they're willing/able to pay; high prices may turn off buyers whether you agree or disagree with this thinking (I guess we can be TOO nice!).
2. There's plenty of evidence out there that proves if you price your home too high, buyers will discount it and not even bother to look at it. The Toronto housing market is no exception and this trend has been seen time after time in different markets around North America!
3. The feeling of having your home sit on the market for an extended period can be really unpleasant if you’re living there. It means always making sure that it's clean and ready to vacate in case someone wants to take over as soon as possible! Trust me, this gets old after just 1 week or so.
Strategy #3: PricING Your Home At FAIR Market Value
The guidance of an expert agent who understands the market and how to price your home correctly is crucial for this strategy. If you're lucky enough to have one, then they'll be able to guide you through every step in making sure that everything goes smoothly from start to finish which can ultimately lead to a successful sale.
When it comes to determining the fair market value of your home, your REALTOR should look at:
- the recent sales in your neighbourhood;
- the available properties that are currently on the market (the competition);
- current market conditions; and
- the pluses and minuses of your home.
We know that the price of your home is a moving target today and we're here to help you stay one step ahead. If it's time for you to sell, we will give an idea of what its value would be in today’s market as well as discuss all different types of pricing strategies so don't hesitate - just connect with us.
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