Deciding on the most effective pricing strategy when selling your home can be a critical factor in achieving a successful sale. This post explores the two primary approaches to pricing and discusses essential considerations for making this decision.
When preparing to list their home for sale, many sellers grapple with the question: should they set the price below its market value to generate multiple offers and potentially sell for more than the asking price? Or should they list it closer to what they believe it's worth and wait for the right buyer?
There are three primary factors that an agent and seller should consider when deciding on the right pricing strategy.
Market Conditions
Understanding the competitiveness of the market in your particular neighbourhood is crucial when determining the pricing strategy for your home. Instead of relying solely on regional trends, a seller’s agent should analyze how competitive the market is in their immediate area, considering factors such as the number of showings and offers nearby homes have received rather than solely looking at sale prices.
A similar home in your neighbourhood may have been priced low and sold for $100,000 over the asking price, but that doesn’t mean you should follow the same strategy. If that home had relatively few showings and only one or two offers on their offer night, it could be a sign that the market is cooling down.
When the market is frenzied and similar homes receive more than four offers on their offer night, this may suggest pricing low is the better strategy. But when similar homes receive only one or two offers on their offer nights, or if we start to see an increasing number of homes failing to get an offer on their offer night, this is a sign that the market is cooling down and pricing higher might be the better option.
Property Characteristics
Beyond market conditions, it's essential to consider the unique characteristics of your home when determining the pricing strategy.
If your home possesses distinctive features that may appeal to a smaller segment of buyers, such as a unique layout, special amenities, or a specific architectural style, it may be more advantageous to list the home at the price you desire rather than pricing it low in expectation of multiple offers. Homes with unique attributes may attract a niche market of buyers who are willing to pay a premium for these features, making it unnecessary to rely on pricing strategies aimed at generating multiple offers.
By recognizing the value of these unique characteristics and pricing the home accordingly, sellers can attract the right buyers and maximize their chances of achieving a successful sale at their desired price point.
Seller's Preferences and Needs
Sellers' individual preferences, financial goals, and timelines also play a significant role in determining the pricing strategy for their home. For some sellers, achieving a quick sale may be a top priority, leading them to consider pricing the home competitively to attract buyers rapidly. Others may be more focused on testing the market by pricing their home high and are willing to wait for the right buyer at a higher price point.
In summary, evaluating market conditions, assessing property characteristics, and considering personal preferences and needs are essential steps in determining the most effective pricing strategy for selling a home. By carefully weighing these key considerations, sellers can make informed decisions that maximize their chances of achieving a successful sale at the desired price.
Note: The above YouTube video includes real-life examples, myths about pricing strategies, and questions sellers should ask realtors when interviewing them.
John Pasalis is President of Realosophy Realty. A specialist in real estate data analysis, John’s research focuses on unlocking micro trends in the Greater Toronto Area real estate market. His research has been utilized by the Bank of Canada, the Canadian Mortgage and Housing Corporation (CMHC) and the International Monetary Fund (IMF).
Have questions about your own moves in the Toronto area as a buyer, seller, investor or renter? Book a no-obligation consult with John and his team at a Realosophy here: https://www.movesmartly.com/meetjohn
May 14, 2024
Selling |