September 13, 2019 | Good to Know

Stylish Sunroom in the Annex

There are many factors when it comes to pricing your home to sell.

Note that we stated “sell” not simply post a listing on MLS to then languish for months. Followed by your disappointment and frustration. We are in the business of selling homes, not making poor decisions and negatively impacting our great relationships with our clients.

There many factors that go into the process. Market strength, time of year, seller’s comfort level, amount of knowledge and discernment that a realtor has, etc.

There are three approaches when it comes to how to price your home to sell:

The Lofty Price:

List above market value. We aren’t talking about pricing too high that we end up missing your target market but setting a higher price point that explores how the market responds.

Advantages

  • It provides built-in room for price negotiation.
  • Allows Seller to reassure themselves that money hasn’t been left on the table.

Disadvantages

  • Can discourage knowledgeable, qualified Buyers.
  • Can actually help sell other, reasonably priced homes.
  • Tends to cause homes to languish on the market to eventually attract low-ball offers.
  • In order to find new segments of Buyers if the property does not immediately sell, you will need to reduce the price in significant chunks. Often reductions are then needed by upwards of 10% to attract a fresh Buyer pool.

At Market Value:

We list at what we believe as the market value. This is typically better suited to balanced markets.

Advantages

  • Attracts qualified Buyers who can afford the property.
  • Efficient timeline on the market.
  • Encourages knowledgeable Buyers to act before the property sells to someone else.
  • Most Effective strategy to generate multiple offers from qualified Buyers.
  • As pricing is an inexact science, should the price err on the side of low then multiple Buyers will be attracted, usually generating a higher selling price.

Disadvantages

  • Fear of the unknown. Could it have sold for more?
  • ‘Missing out’ on the hype that underpricing may generate but tends not to result in a higher selling price.

The Low Price

Before you skip over this idea perhaps thinking that this sounds ridiculous. There is a plan. The plan is to price below market value with an offer holdback day. Keep in mind, there must be executed perfectly otherwise it can end poorly, read: not succeed and you get less than what the property is actually worth.

Advantages

  • Generates a great amount of interest and offers (ie., multiple offers)
  • Lots of excitement and showings.

Disadvantages

  • Risk of getting only lower offers.
  • Attracts Buyers qualified for lower price ranges.
  • In heat of activity, Buyers have been known to purchase beyond their capacity, not really being able to afford the property and looking for subsequent abatements or renegotiations.
  • Risk being overlooked by the qualified Buyers who aren’t looking at homes that low in price.
  • Alienates fatigued Buyers not wanting to participate in multiple offers or activities deemed “realtor games”.

It isn’t’ necessarily easy to price a home. In fact, we would argue it is difficult to get it just right. The strategy is everything. Get your unique selling strategy here. We are careful to weigh the options with our sellers. This ensures that they are confident and have full by in for what the process will look like. Call us to discuss selling your home, click here to get started!

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