Pricing your home right from the beginning is one of the most important things you can do to ensure your home sells quickly and you net the most amount of money for it.
But how do you do it?
First of all, we need to determine the market value range of your property.
We start with a thorough research on your local, micro market. The value of a property can be impacted by many factors: land value, condition of the house, improvements you have made as well as neighbourhood. What are the positive aspects of the area you live in? Are there any parks, golf courses, recreation facilities, transportation, highways close by? Is it a desirable neighbourhood, are you in a child friendly court? What are the things in your local community that prospective buyers can be attracted to? How are the local schools?
We also consider all the negative aspects of your neighbourhood: does your property back onto a busy street, train tracks, a noisy commercial business, are there any power lines close by that many people would prefer to stay away from? Also, is there anything close by, that carries a stigma? Crime rate can be a major factor too.
We combine intimate, local and national market knowledge, an exhaustive study of similar homes for sale and an analysis of past sales to arrive at the optimal market value. It’s not an easy task, but it’s a critical one. Keep in mind that unless your home is the only property available for sale in the whole market, you are competing with other homes that are available for sale at this time. How does your home compare with them? Does it stand out from the competition?
After a thorough analysis of your local micro-market, we will know what the ratio of sold homes versus available for sale homes is. We will base our marketing strategies on this analysis making sure that your home will be the one standing out from the competition and also the one that sells.
Now, how do we set up the asking price to attract as many buyers as possible?
We believe that pricing a home is a combination of art and science:
- The science refers to numbers, land value, etc. We will factor in all the minor nuances.
- The art part of selling refers to adding emotion to the presentation of your home, enticing a prospective buyer to fall in love with your property and ultimately proceed with purchasing it.
So, pricing a property right is important, but of equal importance is the presentation and marketing of your home. Having your best interest in mind, we tailor our marketing strategies to your case and suggest the right steps in preparing your home to be shown (tackle all minor repairs, neutral paint, declutter, depersonalize, clean and stage, professional photography and videography, 3D virtual tour and drone shots to showcase the uniqueness of your property and neighbourhood and advertise it properly). Once all of the above is done to perfection, pricing your property right is what can make or break the deal!
How do you launch your listing to create interest, lots of showings, and at least one offer quickly?
Price your home too low and you leave money on the table — perhaps thousands. Price it too high and you scare away buyers — perhaps forever. To complicate this, your home is an emotional asset for you. It’s hard to see it objectively, as a “product” for sale. If you want to get as much for your home as possible within a reasonable time frame, price it objectively and right the first time.
The value of your property as perceived by prospective buyers has nothing to do with the amount of emotion you have invested in your home. Your emotion as a seller has no monetary value in the process.
Another important factor when pricing your property to sell is the months of inventory(MOI) in your local market. Is it a seller's market , balanced or a buyer's market in your neighbourhood right now? The MOI refers to the number of months it will take a neighbourhood to sell all the available homes, at the rate they are selling right now, if no new homes will come up on the market. Sounds complicated, doesn’t it? Well, this is when us, your experienced realtors come in handy!
A balanced market has a MOI between 4 and 6. Anything below 4 is considered a seller's market, anything above 6 MOI is considered a buyer’s market.
Let’s look now at the 3 possible pricing strategies:
1. Pricing below market value
This strategy works great in a heavy seller’s market, with a MOI of 0 to 2. A MOI between 2 and 4 is still a seller's market but towards a balanced market. A seller’s market is such when the amount of buyers interested to purchase in an area is larger than the actual number of homes for sale. In such markets, homes sell fast and often with multiple offers. If done right, this strategy can bring the selling price at market value or higher.
2. Pricing within the market value range
In a balanced market, it may take about 30 days for a property to have the maximum exposure and 30 to 60 days for the property to actually sell. Pricing at market value can be the best strategy in order to achieve a reasonably quick sale. The expected days on the market are different for different markets and neighbourhoods. We, as your experenced Realtors, can predict a reasonable expectation for your property based on the recent statistics.
3. Pricing above market value
Offering a property above market value is a recommended strategy when the actual market value is at the upper margin of the market value range we have provided AND there is no available inventory, so no competition. Some homeowners feel like their property is worth more than it actually is and they want to try a high price and see what happens. Pricing above the market value is not recommended if there are no other reasons to support it, other than your own believe. Keep in mind that buyers work with buyer agents that have access to the same data we as sellers agents have. They too know what the market value for your property is. Many won't even visit your property if it is priced too high and they will never know that you are willing to negotiate since they will just decide to deal with another property that seems to be more reasonably priced.
If the listing price is 5% or higher than the market value, the home will be perceived by the public as “overpriced “ and buyers will avoid it. These homes tend to stay on the market longer and if several price adjustments are needed, chances are they will end up selling for less than it would have sold if they were priced right from the beginning.
How do we determine if the pricing strategy is right?
Once we launch the listing, if all preparation is right, home presents well, price is right and your home appeals to prospective buyers, we expect 7 to 10 showings over the first week of the MLS listing and one offer.
- If showings are hapening but no offer, the property is over-priced by at least 5%.
- If there are no showings, either the marketing, the presentation or the price are not attractive (or a combination of all)
- If there are more than 7-10 showings within the first week, multiple offers might happen.
Collecting feedback is very important, it will give us an idea on how the property is perceived by the market. At the 2 weeks mark from the launch of the listing, we schedule a review and re-evaluate the listing price. An price adjustment might be necessary.
When you work with us we become a team. We will work together to decide what the best strategy is and we have one goal: to provide you with all this information in order to help you make the right decision!
If you are thinking of selling your home soon, have any questions about your local market or would like to find out what your home is worth today, reach out to [email protected] and we’ll be happy to assist you!
Happy Selling!