When listing your home for sale, it’s important to choose a selling strategy that is going to help you achieve your goals.
In my experience, the goal of most homeowners is to sell their properties for the highest amount of money in the shortest period of time.
To help them achieve this, listing agents typically help sellers choose from one of two pricing strategies:
1. Pricing the home at the high end of its estimated market value and taking offers at anytime.
2. Pricing the home under value and setting a date and time at which all offers will be reviewed at once. This 'offer night' strategy aims at getting multiple offers which will have to compete against each other, ideally pushing up the selling price of the home.
The type of strategy chosen is typically dictated by the type of property, the seller’s personal situation and the demand for and supply of homes in the current market.
Another strategy has picked in popularity since the slowdown in the Toronto area real estate market in the second half of 2017 - the 'marketing period'.
The marketing period strategy aims to capture the best of both of the strategies first mentioned above. In it, a home is listed at a price the seller is willing to accept, but there is a set date and time after which the seller will take offers at anytime. The period in which offers are not accepted, in effect a "marketing period”, usually starts from the date the home comes onto the market (or listed) until the first Sunday Open House concludes, with the aim of allowing as many people as possible to view (and perhaps make an offer) on the home.
This helps you improve your upside while avoiding the risk of the ‘offer night’ strategy - the scenario in which no offer is received and the home has to be re-listed at its actual estimated market value (not below) it, making buyers wary about paying more for a property “that no one else wanted.” Such a risk is considerably lessened in a hot market, but in a slower market such as the one we currently find ourselves in, sellers offering homes in particular areas or with particular issues need to adjust their selling strategies accordingly.
The marketing period can also work as a transitional strategy. In an uncertain market, you can list at the high end of the estimated market value of a home, and if you are getting a high number of requests for viewings and great feedback, you can pivot on your original strategy and set a marketing period retroactively.
I have utilized this strategy multiple times in the past few months to great success - it has allowed my clients to maximize selling price while taking a conservative listing approach.
Let’s take one of my recent condo sales at Yonge and Bloor as an example.
This condo was in an excellent location - walking distance from two main subway hubs, close to the University of Toronto and centrally located. The unit was a 2+1 bedroom corner unit on a higher floor (lots of windows and natural light) and updated.
Unfortunately, there was a frivolous lawsuit against the condo, which could have turned away potential buyers.
Looking at the previous condo sales in the area, it appeared that most units were selling in a month - under asking price. Although this unit was a great listing, the potential for lowered demand due to the lawsuit against the corporation made an offer night strategy (option #2) risky. Taking all pertinent facts into consideration, my client and I decided that the best strategy was to list at the high end of market value and take offers anytime, but to keep open the possibility of introducing a marketing period - depending on the number of requests for viewing and feedback received.
Within the first day on market, we received over sixteen viewing requests, with a conditional offer being submitted by 5PM that same day. The offer was decent, but since we had many showings booked over the next few days and weekend, my client and I decided that rejecting this offer would be best. We wanted everyone who was interested in the unit to be able to see it so we set our “marketing period” from the day of listing until after our open house ended on the Sunday at 4pm, after which offers would be taken at anytime.
That Sunday, we received six offers, all over asking, all unconditional. We ended up setting a record sale price for the building and neighbourhood -- selling at almost $1,250 per square foot and ~$200,000 over the most recent comparable sale.
Most importantly, given the possibility that the condo's legal issue might have spooked buyers, we steered around the risks of the usual offer night strategy.
Top image credit: RaStudio
Nicole Harrington is a Sales Representative with Realosophy in Toronto. She specializes in using data and analytics to help her clients make smarter real estate decisions, concentrating on Toronto and the GTA, and hosts her own website: SheSellsToronto.com.
October 3, 2018Selling |