As a real estate broker that focuses mainly on selling properties, my day-to-day work includes a lot of property valuations and pricing strategy conversations with home owners who are thinking of selling. One of the main conversations that we have as a team is how to price your property and why. So how should you price your property? Which strategy is right for your family? – Our answer is kind of tricky but here it goes!
The first thing you need to understand as a prospective home seller is that there is no exact value to your home. As a broker who specializes in more than one borough of the city, you have to expect to get a price range not fixed value from your realtor. (i.e. $500,000 – $525,000) A lot of my clients often tell me that they were expecting an exact value for their home, but the way we look at it, property values are usually very subjective to the prospective buyer… Some people may be willing to pay $10,000 more because the home has a pink kitchen, and some people might want to rip that same kitchen out. The part that surprises most people is that the value can range between buyers as high as $50,000 sometimes!
The second thing that needs to be taken into consideration when pricing your home and the most important is your motivation to sell, You can also think of this as the reason you are selling. This is the first question I ask my clients when we meet because vendors selling for different reasons typically tend to have a different price in mind for their home. A good example of this is using the same type of home, on the same street… Vendor A is selling due to the passing of their partner, and vendor B is looking to upsize into a bigger home. Although these homes should have a very similar value if all other aspects are similar, the seller’s motivation varies, and in consequence so does their price point.
Obviously as mentioned above, by using market comparables, neighbourhood statistics and studying your home, we can definitely narrow the value down to a small price range to be able to give you as good a variation as we can, but every property and their owner should choose their listing price based on their personal motives to sell. We define these motives by the number of days you’d like to stay on the market. Here is what we mean by that
Motivation 30-60 days:
This situation is usually used by vendors who are selling under duress. Situations such as divorce, death, major renovations or debts usually push people to want to sell quickly and make things happen in under a month or so’s time. The pricing strategy is usually on the lower end of the price range and sometimes even beneath that number as well! Does this mean that you will necessarily sell for below market value? Not at all! Usually pricing your property under market value draws in much more attention in a shorter time frame, and if you are lucky enough, you might just end up in a bidding war!
Motivation 60-120 Days:
This scenario is, in my opinion, the most common choice of our clients and for obvious reasons. Most neighbourhoods, in most cities around the province, typically take around 2-4 months to be sold. This means that if you are pricing to be sold within the “norm” of the market, then you are not in a rush to sell, but are looking to get the job done within a reasonable time frame and at a reasonable price point. This is our most highly suggested price point for our clients because it reduces the chances that you will be listed on the market for too long and need to drop your price. This motivation is usually used by clients that are looking to either downsize, move to a new neighbourhood or upsize for their growing families. (i.e. moving from a condo to a home, or a home to a larger home for their growing family)
This scenario is the one we tend to try and stay away from as much as possible but does fit the needs of a lot of our clients. Typically when older folks call us to sell their long time home, we use this strategy.. Or when a couple calls us and wants to “test the waters” to see if someone would be willing to pay their price, we see this price come out… Unfortunately we call this the fishing price. It is the price that will attract the least amount of buyers, take the longest to sell and also may turn into the most stressful time for the vendors, but the truth is… We typically see clients use this when they know they need to sell, but are not emotionally ready to make the move. Oftentimes we see this strategy end up in price reductions, or simply sitting on the market for a long time before selling.
At the end of the day, we believe that all of our clients deserve our honest advice and consultation but have the right to choose whatever strategy they feel fits their needs most. If you are on the fence about selling and are looking for a team of brokers that allows you to take the steps at your pace, give us a call and let us give you our pricing strategy for your home.