There are three approaches to pricing a property. Learn what they are right here.
There are ultimately three different strategies we can use to price a property to sell on the market. Whenever we meet with our sellers, we ask them to think about which one is most applicable to their situations.
First, we could underprice the property anywhere from 3% to 5% below the comparable homes that have sold in your area. This would help to sell your home quickly, and you’ll often get top dollar; lower asking prices typically generate multiple-offer situations. There are some risks involved in this strategy, however. If there isn’t a multiple-offer situation, you might end up selling your home for 3% to 5% less than market value. Most of the time, though, we see this strategy get full price or more for our sellers.
Second, we could implement aspirational pricing, or price your home slightly above its market value. This is a popular starting point for sellers, but it doesn’t always work. Buyers shop by comparison, so if they think your home is overpriced, you might find yourself having to reduce the price, possibly below market value, to compensate for the lack of interest.
Finally, we could take the “Goldilocks approach”—pricing your home based on comparable sales in your area. This is simply positioning your home right within its value range, and typically you’ll get something close to your list price by using this strategy.
"It’s important to price your home right where it needs to be."
Your home’s price can put you in one of three market positions:
- If you price your home between 0% and 3% above comparable prices, you’re in the market—buyers are coming back for a second look and showing genuine interest in buying your home.
- If you price your home between 3% and 5% above comparable prices, you’re in the “no man’s land”— this is where the vast majority of listings sit, and they help other homes in the market sell by way of comparison. These homes get a lot of showings, but not much serious interest. A price reduction of $15,000 to $20,000 is roughly what it takes to get the average home out of no man’s land.
- If you price your home between 5% and 10% above comparable prices, you’re out of the market—it’s actually better to be out of the market than it is to be in the no man’s land. If you’re dreaming with your price, at least you’re dreaming in peace; no one’s coming to see your home, so you don’t have to do the work of keeping your home show-ready. You don’t have a chance at selling, but hey, at least you’re not being inconvenienced!
As agents, we have the ability to see how your home resonates with buyers who are looking at it both on Realtor.ca and through our matrix portal system. We can see 200 people who have a portal set up for this property type and how many people consider it a favorite of theirs. We’ll identify ratios between those two factors to see how your listing is landing.
2020 is going to be a great market year, but there will still be some competitiveness on the selling side, so it’s important to price your home right where it needs to be.
If you’re interested in selling your home or at least figuring out what you could get for it if you did sell, don’t hesitate to reach out to us. We’d love to chat with you.