If you’re reaching out to us in order to put your home for sale, you may have heard a thing or two about the bidding war strategy when pricing your home. I can assure you the buyers that will line up to visit your home know a lot about it . This article is meant to give a brief inside look into said tactic and help you figure out if that is the right tactic for you.
What is the bidding war tactic?
Looking to sell your home? Obviously getting top dollar is what interests you most right? Well in this market, with the lack of inventory and prices rising every quarter this tactic started by mistake. We use a benchmarking strategy to evaluate your home, looking at the last 6 months of sales, but recently looking at the history the prices have already risen very fast and it is now evaluated higher than the last 3-6 months, Today, we make sure to add inflation and increase in price even though the comparisons are done with homes of just a short while ago. Essentially, every home has a value, let’s use a market value of $500,000 for example sake. If you and I (your broker) meet , and we establish that the value of your home in comparison to those recently sold in your neighbourhood is $500,000 for your home, how do we price it? Historically you would have been advised to list your home a little higher than you expect to sell it at and get negotiated down to your ideal price. Today’s tactic is all but that… The logic would be to list the home around $429,900 or $449,900, create a false urgency around your product and make sure to have buyers up their offers, you may end up with $490,000 or even $520,000!! But this does not come without its own risks, and it may not be the right tactic for your family.
Risk vs. Reward
This tactic can work, and you can sell successfully within week one well above your asking price, but what happens if you misjudged the market? The weakness in this tactic is that if you do not end up getting multiple offers and now your home is stuck at this price point and raising the price will not justify it because buyers are already not willing to pay $449,900. Risk #2, what if your offers fall short of your expectations? What if you list at $449,900 and you do get multiple offers, but the highest bidder with the best conditions is only at $485,000. well under your $500,000 expectation, now what?
As a seller in today’s market, you do not need to sell in 7 days to feel good about yourself. What we recommend is simple, let us know what makes you feel most comfortable, are you ready to risk it with a bidding war tactic, or would you rather take your time and sell to the right buyer in under 90 days and not feel rushed to make any decisions.
Remember, your home has a value that you set with your real estate professional by using a comparative analysis approach. If your value is set at $500,000, you will likely get that amount no matter what tactic you use. whether you start at $529,900 and it takes 3-4 months to sell, or you start at $469,900 and get it done in a week or two. Always make sure to discuss your comfort level with your broker and what you feel is best. We are here for you.