Developing a pricing strategy
When searching for a home, buyers will go through extensive comparison shopping with much of their concern focused on price. With the ease of finding information on the internet, buyers today are so well educated on the real estate market’s activity and pricing. It is so important for us to determine a realistic and accurate market value for your home. We want to set the price of your home high enough to ensure a maximum return to you, yet still appear attractive to buyers when compared to similar homes.
Priced too Low:
We want to be careful to not price the home too low, as we do not want to leave money on the table. Our goal is to get you as much money as we can.
Priced too high.
We also want to be cautious of pricing to high. Homes that are priced too high produce far less showings, and typically those showings do not generate offers.
Pricing a home accurately is the best way to ensure that the home will sell in the shortest time possible, yet also achieve the highest price possible.
- Your home’s location, home size, lot size, architectural design, floor plan, age, amenities and condition have the strongest impacts on the value.
- There are other factors that also directly impact the value of your home. These include current mortgage interest rates, national and regional economic conditions, buyer demand, seasonal demand, availability of competing properties and prices of recently sold properties.
A Comparative Market Analysis (CMA) is the the strongest tool we use when estimating the potential selling price for your home. As a member of the Edmonton Real Estate Board, with access to the Multiple Listing Service, I can prepare a report that analyzes comparable homes in your area. Using this valuable information, I can assist you in determining an attractive, yet realistic price for your home.
A Comparative Market Analysis highlights similar homes in your area that are:
- Active Listings – Homes that are currently competing with yours for the attention of buyers. We can see what comparable asking prices are, but remember these homes have not yet received an acceptable offer. Homes that are pending have received an acceptable offer and give a good indication of realistic pricing.
- Solds – Looking at the prices paid for recently sold homes provides the best foundation in determining your home’s most accurate market value. Once adjustments are made for square footage and features, I can make a qualified recommendation for the asking price of your home.
- Expired – Homes that have gone through the duration of a listing period, but failed to sell. Many factors could be responsible such as lack of marketing or the home’s condition, but most often it is simply because the home was priced to high.
A buyer will not pay more than they need to
It’s quite simple, a Buyer is just not going to pay any more than they have to when purchasing a home. They have been watching the market closely, and are out there looking at all the inventory. They know more than anyone what is available, and for how much. If your price is within the range of your market, Buyers will come look at your home. If you’re priced too high, they probably will skip it. Your high price will make your competition look good, and will get them sold, not you.
An asking price that is beyond market range can adversely affect the marketing of a property.
The excitement of a “New On Market” listing
When selling your home, time is not your friend. When a new home is listed for sale, I market it extensively to other agents and potential buyers. Most of the local working agents and their prospective buyers will see it come on to the market right away. Interest will build over the first week or two, with a peak of interest usually at about 2-3 weeks out.
Then as I always see, the activity of inquiries and showings will start to decrease rapidly. Your home becomes “old” and “stale” in the eyes of other agents and buyers. Marketing time is prolonged and our initial marketing momentum is lost. If you are not priced right, you may miss showing opportunities, or showings that do occur will not produce an offer. Your home may eventually sell below marker value due to these costly delays.
The problem with “Testing the Market”
A common mistake sellers make is pricing their home high in the beginning to “test the market”. The though is “we can always lower the price if we don’t receive any offers” or “we need to build in a cushion for negotiation”. Unfortunately most of the showing activity occurs when the home is first listed. Once initial pool of buyers have seen the home and it doesn’t sell, the sellers will then have to wait for new buyers to come into the market and they will have to reduce their price to be competitive.
Also, the longer your home remains on the market, the less interest it will generate among all buyers. Buyers typically feel that they should pay less for a home the longer it has been on the market. At that point you have to face the real possibility of being forced to sell it for less than if you had priced it at fair market value from the start. It is especially important to make sure that your home is priced correctly when the conditions are leaning towards a buyers market. In that scenario buyers are very sensitive to price and will look harder to find homes that offer the most value. Simply put, buyers are not making “low-ball” offers on properties, they are waiting for properties priced correctly to come onto the market.
Why your first offer is often your best offer
Another common mistake Sellers make is to disregard the first offer they receive. Often, if they receive an offer quickly, they get over confident and think maybe they could do better if they wait for another buyer. Rarely is that the case. When you first list your home for sale, new buyers and buyers who are waiting for the right fit will come see your home. So it is possible, if priced at Fair Market Value, that you could get a good offer right away. After time goes on, and pricing comes down, you then attract the Deal Makers. Then after more time and more price reductions you attract the Bottom Feeders.
Who would you prefer to sell your home to?
The “Selling Equation”
It’s really quite a simple equation. Price + Exposure = Your Home Sold.
You must first start out with correct, accurate pricing for your home. Then once we have the home priced right, I will heavily market the home to both potential buyers as well as to other Realtors in the area. I have established many great avenues and resources for marketing your home, but if we are overpriced, all of my extensive marketing efforts will go to waste.