Strategically Pricing Your Property To Get Top Market Value
Strategically pricing your home and determining the best asking price for a home is one of the most challenging, and also important, aspects of selling it.
In fact, it’s a balancing act. On the one hand, you don’t want to set a price so high that it discourages showings and serious offers from qualified, motivated buyers who would otherwise determine your property’s top market value.
On the other hand, you don’t want to set a price that’s so low that it attracts lots of interest, but sets the stage for offers and negotiations that will get you less for your home than you could if your pricing was a little more aggressive. This balance, which corresponds to your home’s true value in the marketplace, is depicted in the following Pricing Pyramid diagram.
1 – So What’s Your Home Really Worth?
In a perfect world, your home’s value would be everything you need it to be to fulfill your plans and financial goals. Ultimately though, your home’s value is not determined by you, but by what the market – founded upon supply and demand – is willing to pay for it at a given time.
These days, the “market” increasingly refers to buyers who have researched property values online for at least a year, have already viewed 10 homes, and aren’t under any pressure to buy. This is particularly so in the Georgian Triangle, which includes so much recreational and luxury real estate, such that buyers often contemplate buying for years before they finally do.
To determine your home’s true market value, as well as set expectations for what you’re likely to sell it for, you should:
Try to be impartial. Unfortunately, the “market” isn’t interested in what you originally paid for your home, or how much you need to sell it to buy your next home and meet your financial goals. In addition, your home may have features that you highly value, but which might actually reduce its market value by limiting the number of potential buyers who’d be interested in purchasing it.
Remember why you are selling. Do you want to sell or do you need to sell? Is a faster sale important to you?
Consider the market itself. Are area home prices trending up, down, or levelling off? Is there still a lot of listing inventory with high days-on-market numbers? Doing your own online research at LocationsNorth.com will help keep you informed.
While these considerations will yield an approximate market value, the best way to determine your home’s value will be to get a Comparative Market Analysis (CMA) from an experienced REALTOR(r) who lives the market day-in, day-out. We would be happy to provide you with a CMA, so please contact us when you’d like one.
2 – Price Your Home To Sell When Its Market Exposure And Buyer Interest Are Highest
As noted in the previous section, the key to getting top market value for your home is: on the one hand, to avoid overpricing it such that you get few showings or serious offers from qualified, motivated buyers; and on the other hand, to avoid underpricing it such that you get lots of showings along with offers that are less than what you can and should could get.
Another way to view this balancing act is in terms of how long it takes your home to sell after your list. Real estate sales analysis has repeatedly shown that you’ll get top market value if you sell when your home has its maximum market exposure, buyer interest, and showing activity. With the exception of hot sellers’ markets, this “window of opportunity” usually occurs about 2-5 weeks after you list, as depicted in the Activity-To-Time-On-Market diagram below.
So in short, timing is crucial to getting top dollar for your home. This means that you need to price it so you get a firm offer during weeks 2-5 of the listing. This, in turn, means that you need to price your home realistically right from the beginning.
3 – The Dangers Of Overpricing Your Property At The Time You List
The strategy of overpricing your home when you list – knowing that you can reduce the price later – might seem to make sense at first glance. However, it seldom works. In fact, sellers who overprice their homes (even just 10% above market value) and then reduce the price one or more times often end up getting less than they would have if they had priced it realistically from the start. And as depicted in the following Consequences Of Overpricing diagram, this may mean that you actually end up getting less than market value for your home.
There are many reasons why:
- Fewer buyers – even if they like your home – will respond to your marketing if they think your home is overpriced.
- Fewer REALTORS(r) will show your home to their buyers if they know it’s overpriced.
- The right buyers – i.e. those looking to buy a home like yours – may never view it because they’ll confine their search to a lesser price range where yours should be.
- You’ll attract the wrong buyers – i.e. those looking in your price range – who won’t be interested in your home, having viewed others truly worth what you’re asking.
- Your overpriced property will make others look better, so you’ll actually help to sell your competition.
- You’ll get fewer if any, serious offers because buyers may consider it a waste of time.
- Even if you do get a serious offer, the excessive price can lead to a mortgage rejection for the buyer if the lender has a professional appraisal done on your home. This leads to critical lost time waiting for finance approvals that never go through.
And the result?
- Beyond about six weeks, your home will increasingly be viewed as a “stale” listing – i.e. as a commodity with a history of being rejected by other buyers.
- There will be less market buzz among both buyers and REALTORS(r), fewer showings, fewer offers, and less likelihood that you’ll get your asking price.
- When you eventually do reduce the listing price it won’t generate as much interest as if you’d priced it right from the start.
- As it happens in many cases, after repeated price reductions you’ll end up getting less than if you’d priced it right from the start.
- You’ll go through the inconvenience and stress of having your home listed for longer and not selling it. On account of not selling your home, you may miss great opportunities to purchase that next home you really want. Now, these may be unpleasant facts for some potential home sellers reading this. However, they are the facts, and they play themselves out all the time in every real estate market.
We’re committed to getting you top market value when you sell. We know the Georgian Triangle market inside and out, and the fact that we’re the area’s #1 Brokerage is largely due to our REALTORS(r) get so much repeat and referral business from satisfied clients. That’s why when you decide to sell your home, we hope you’ll list it with us.