How your selling strategy may be confusing buyers - enough to keep them away.
A few weeks ago, I received an email from a buyer client interested in a property in the Toronto neighbourhood of High Park. Upon reviewing the listing, I called my client to provide my feedback – a very nice home, renovated with proper city permits, legal parking, great school district, walkable and transit-friendly. In fact, I didn’t see any red flags with this property - except for its listing (selling) strategy.
In a busy real estate market like Toronto, there are two main listing strategies that a seller and their listing agent may use – the first is to price the home at what it’s worth and wait for offers to come in at any time and the second is to underprice the home and set an offer night on which potential buyers to bid on what they would be willing to pay for the property (essentially setting up an auction). In a competitive market or hot neighbourhood, the latter is typically used. What’s important to note about utilizing an offer night: the asking (or ‘list’) price is nothing more than a marketing strategy – a ploy to get more people in the door and hopefully help sell for a price bid up through increased competition between buyers.
Buyers in markets like Toronto are savvy – they now know that when a home is listed with an offer night, the seller is expecting to receive an offer for more than the asking price.
But what happens when the seller has set an offer night but is not expecting this?
Based on my review, I could see that the home was priced within its actual value range, but the sellers had set an offer night - and as noted above, when using the offer night strategy, it’s typical to underprice instead.
Upon informing them of this, my clients were immediately turned off – did the sellers want multiple buyers to bid up a price higher than what the home was actually worth?
It was a situation my clients did not want to get into – and it looks like other buyers may have felt the same way - the home did not sell on offer night.
When properties don’t sell on a offer night, a psychological stigma gets associated with the home: Why didn’t it sell? What’s wrong with it? If no one else wanted it, why should I?
Sometimes those questions are warranted, but in this case the issue with the property was nothing more than an unusual listing strategy.
We ended up offering on the same home the next day and winning it at a great price for my clients – one they might not had been able to achieve had the sellers hosted a successful offer night for their property.
Moral of the story?
Make sure you are well informed about which listing strategy you should take when selling your home as it could be a choice worth more than a few thousand dollars.
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.