Importance Of Pricing Your Home To SELL

Let’s talk pricing.

One of the key factors in determining whether or not your home will sell. Too often, it is our initial instinct to price high (and I mean HIGH) and work our way back down to reality… we’re all guilty of it! We’re scared that if we don’t try we could be giving up too much. While it’s completely understandable to want to profit as much as humanly possible, it is unfortunately not the most effective strategy. Here’s why.

The first two weeks on market are crucial. This is typically when your listing should see the most action. With more and more Buyers enlisting the help of Buyer’s Agents, a large percentage of the Buyer pool are set up on what we call an automated search. For those of you who may be unfamiliar, this means they are set up on an automated system that alerts them of new listings matching their predetermined criteria. Therefore, if Buyer Sally is looking for a detached 3 bedroom home in Barrie for under $500,000 and your detached 3 bedroom home comes up for $499,000, she will be notified. Assuming the listing photos look good (which we’ll save for another blog discussion), she will likely call up her agent to schedule a showing immediately. Of course, there are many other Buyers in the same boat as Sally which, in turn, creates a sense of urgency. If I go through your hot listing it’s 2nd day on market and it checks off all my boxes (after weeks of looking I might add), I likely don’t want to risk losing it to the next showing that goes through the doors. In this scenario, I would put forward a strong offer that is enticing enough to you, as the Seller, that there’s no need for you to shop it around. I want to lock the property down before you sell it to someone else. In this case, you’ve maximized your profits by understanding consumer psychology and pricing your home appropriately.

Now, let’s explore what could easily happen if this wasn't the case. Let’s say you chose to price high and the first two weeks have come and gone with little to no action. Buyers are scared off by the asking price and traffic has been driven to the house around the corner (with similar layout and finishes) priced at $50,000 less. At this point, you are feeling a little defeated and agree to drop the price closer to market value. Doing so sparks a bit of interest and a few showings are scheduled. A few showings isn’t a slam dunk by any means but, considering most Buyers have already disregarded the property, it’s a step in the right direction. EUREKA! One of the Buyers ends up being interested in the property and is contemplating putting forward an offer. There’s only one problem… there is ZERO sense of urgency. The property has already been on the market for close to a month and they know for a fact it’s not selling overnight. Maybe they will put in an offer... maybe they won’t… maybe they’ll sleep on it for another week and, ultimately, put in a lowball offer… and I wouldn’t necessarily blame them. They are in a position of power when it comes to this particular negotiation. They’re well aware of the fact that you’ve been trying to sell your home for nearly a month. At this point, interest is dwindling and limited to new Buyers entering the market. You finally reach an agreement but end up getting beat up on price to get the deal done. Now you’re getting below market value on the exact same property because you didn’t play your cards right. Nine times out of ten this is the reality of pricing well-above market value.

Of course, there are exceptions to every rule but, generally speaking, pricing your home effectively right off the hop will reap you the greatest reward. A quick sale and maximized profits.