THE IMPORTANCE OF PRICING
SITUATION #1: Harold and Lesley have been living in their Old North home for 10 years and want to move out of the city. The surrounding homes have been selling at good prices and Harold and Lesley expect the same prices that their neighbours have been getting, even though their house is one of the smaller homes on the street with limited parking and no garage and lacks some of the improvements that other homes on the street have recently had done.
SITUATION #2: John and Margaret bought their home in the midst of a Seller’s market, outbidding four other buyers. They paid $15,000 over asking price. John has just been offered a great job opportunity in a different province just three years after they purchased it. The market analysis indicates that prices in the neighbourhood have not appreciated over the last couple of years, but John and Margaret insist on getting more than what they paid for it.
SITUATION #3: After a long and happy life, Mary has willed her home of 50 years to her grown children. Though the home has fallen into disrepair, her children are not willing to put any money into improving the house and yet they expect to sell it for top dollar and split the proceeds.
These are some of the common situations I encounter when my clients wish to sell their homes. Even though I can help these folks with solid research, sound advice and good market exposure, the common thread here is that all of them insist on achieving a certain, often unrealistic, price for their home. While it may seem like a good idea to insist on asking for “top dollar” for your home, a rigid attitude will likely, in the long run, cost you a lot of time and money and make the home selling process frustrating and draining. It is normal to think that your home is worth a lot (and it might just be worth what you think it is, or more even!), and you and I both want to get the best possible price for your home. You may have done a number of top quality renovations, you may live in a great neighbourhood, and you know buyers will fall in love with your home. But that does not mean that they will pay more for the home than market value.
The truth of the matter is that when a home is over-priced, it will first of all depress the amount of showing activity. Potential buyers and their Realtors will shy away from your property because they are unwilling to pay the price you are asking and do not want to waste their time seeing a home when they are doubtful that they can negotiate a successful deal at a market value price. Also, with internet searches, it may that your house will not show up in the mix of similar properties because you are above the price ceiling for a typical search for a house like yours. And when people do see your house, they are comparing it to houses that are bigger, nicer or newer than yours. Even when an over priced house is spectacular and does generate lots of showings, it still will not produce offers because potential buyers see a negotiating headache. This disrupts your life and causes a constant emotional roller coaster for you. Secondly, as sellers get more nervous and desperate to get a deal done, and as the property sits unsold, the market value of the property may actually decline below market value! Buyers will wonder if something is wrong with the property. They will sense your desperation and it will make them more likely to try to offer you a low ball offer.
You might think that it might be good to test the market at a higher price today and if it does not sell we can lower it down the road. This strategy is almost always bad for you as a home owner for a number of reasons. First, the busiest time for showings is in the first few weeks that a property is on the market. If your reduce the number of people who will view your property or reduce the number of people who will be willing to put in an offer because they feel the price is too high, they generally will not come back to you when you lower the price. They move on and buy something else that is market value priced. Secondly, the longer your house sits on the market the more likely it is to be stigmatized. People assume that something is wrong with the house, whether that is true or not. Third, as you lower the price, as we noted above, you might end up having to lower the price below market value to entice buyers back. Finally, keeping a house continuously ready for showings can be exhausting. The showings disrupt your life. The quicker your house sells the less unproductive disruption you will have to deal with. The best plan is market value pricing in terms of maximizing your value and bringing about a quick sale.
When you work with me to sell your home, we will sit down with all of the market information available to us and we will talk about reasonable expectations, for price and length of time on the market, given current market conditions. Then we will try to price the house very close to market value, that is, the expected sale price. This generates increased showing traffic, makes it more likely that this traffic will produce a reasonable offer and, finally, that we will be able to negotiate with confidence, knowing that your home will sell within the market value range we discussed.
The most important thing to remember as we discuss the asking price for your home, that is the market that sets the price for your home, not wishful thinking or some other factor. Here is a list of a few factors that have no bearing what so ever on market value:
How much equity you will need purchase your next home.
How much you paid for your house. This is especially important in slow markets or when you have to move just one or two years after you purchased your current home.
How much you spent on improvements. How much you spend on improvements is not the same thing as how much value they add to the house. Sometimes you may get back only 50% of the cost of your renovations, or less!
The value of a similar home in a different community. Similar properties can sometimes swing in value as much as 20% or more one way or another depending on the neighbourhood. Location. Location. Location.
The cost to build the same home today. A resale home will always gain value at a slower rate than the identical new home.
My job is to help you set a realistic price to match market conditions so your home sells as quickly as possible for the best possible price. We will talk about reasonable expectations for both price and the length of time it will likely take you to sell your home. This is where my knowledge and expertise comes in. My Comparative Market Analysis is a comprehensive analysis of what similar homes have sold for recently in your neighbourhood. I will weigh that with your home’s unique features to determine how your home compares to these other properties. We will also look at properties that are currently being offered for sale. These are the homes your property will be competing against for buyers. Sometimes the houses that are currently for sale will impact the list price more than past sales. If prices are falling off in a category, it makes no sense to ask for the price people were paying a year ago when every similar property is now selling for less. We will weigh all of these various factors and more to come up with a price that will maximize your value in today’s market and achieve a sale in as quick a time as possible.
SERVICE | KNOWLEDGE | RESULTS
READY TO SELL?
Let’s Get the Process Started! Tell Steve a Little About Your Home and He Will Be in Touch to Discuss the Value and Marketing of Your Home.
Thinking About Selling?
Is Now the Time to Sell?
The Buyer’s Perspective
De-Cluttering and Staging
Selling Your Home
The Importance of Pricing
Marketing Your Home
Home Selling Documents
The Deal Is Firm, Now What?
Your Lawyer’s Role
Getting Ready for the Buyer
After Closing Day
334 Wellington Rd. S
London, Ontario N6C 4P6