Pricing Do’s and Don’ts

Establishing the Right Price for Your Home

When selling your home, price is undoubtedly the most important element to consider. There are two often competing options when deciding how best to price your property. Firstly, you could set a price above the average marketplace, or, you could advertise your home competitively, by listing it on par with other properties in your location. We discuss this further as we compare each situation.
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A Closer Look

You could, for example, price your home below market value, the likely result of this would mean you receive offers to nearly 100% of your asking price. You may even receive multiple offers where some exceed your original price. In any case, the sale is completed. There are no guarantees that had you waited longer, 30-60 days; you’d have got a better price.

In reverse, you could contemplate a bit, and instead of pricing it competitively to current market rates, it was listed at an above-average asking price. There is a chance that one buyer may jump in and buy their perfect home straight away. However, it’s more likely that the property will remain listed for a period longer than anticipated, and further down the line, you have to reduce the price. There is a possibility that the market will catch up, but it’s hard to anticipate.

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Which is Better, Pricing High or Low?

To answer this question, you need to weigh up your ideal outcomes. It all depends on how fast you want to sell. Whether you are willing to risk an extended sales period for the possibility of a higher selling price. If you want a quick sale, it is recommended to price your home at 1-2% below market value. However, if you’re going to sell at market value, then expect a longer sales period.

If you want an outcome that means getting on with your life sooner, then price your home lower from the beginning. Yes, you may gain more money by pricing it more competitively, but it may also be on the market for longer. You may also be searching for your new home at the same time, and if you’ve already found one, then the risk of having two mortgages is a real scenario to consider.

Alternatively, you could price your home over market value. It would be unusual to find a buyer who is willing to pay over the odds, and this is a gamble. You also face having the property on the market for a while which could cause adverse advertising. Most likely, you will be forced to reduce it later in the sales process.

In conclusion, it’s much better to price your home competitively from the beginning. Price it right the first time and save yourself the hassle.

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Buyer and Pricing – The Truth

Homebuyers always want to know how long a property has been on the market for. Unfortunately, price isn’t always the only factor for home buyers. Whether we like it or not, a home that’s been on the market for a long time carries a certain stigma. Questions like ‘Why hasn’t it sold yet?’ ‘Is there something wrong with it?’ will be going through a buyer’s mind. It’s unlikely that a reduction in price will change anything once a buyer has decided they don’t like it.

Price reduction is slippery ground; it’s unlikely you will be the only homeowner reducing your price if your property has been on the market a while. It can be a whirlwind race to the bottom, with you wishing that it had been priced lower to begin with. Adding in expenses, the price of purchasing a new home could grow higher than first anticipated.

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Early Activity is Important

As soon as a new home enters the market, there is generally a lot of activity surrounding it. This is a crucial time in the selling process, and agents and potential buyers alike are taking notice. If overpriced from the beginning, potential buyers can quickly lose interest. By the time there is a price reduction, it’s often too late as buyers have found other properties. Research shows that the majority of listings see the most activity in the first four weeks.

With the right marketing strategy and advertising, it’s likely you will achieve a realistic market value offer when buyers view your property. Meaning the expectation of selling at the best price is a real possibility.

Taking advantage during this peak first four weeks is essential to the profitability and success of the transaction. Our team can help you achieve this, contact us today at Larson & Lambe Real Estate Group 778-400-LIST (5478).

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Why do People Overprice Their Homes?

There are lots of reasons why overpriced homes don’t sell. Sometimes, they even sell for a lower price than what could’ve been achieved originally had it been priced competitively. But people still place overpriced homes on the market; there are a few reasons for this. Here we look at some of the most common so that sellers can be aware of these pricing errors.

  • The Home has been Over-Improved – Making an improvement to your taste, using it, and then expecting the buyer to pay the original cost is not usually advised.
  • Homeowner’s Financial Situation – No buyer is going to care about how much you need to gain from the property sale, the owner’s financial situation shouldn’t ascertain the market value of a property.
  • The Seller is Buying in a High-Priced Location – The location a seller is moving to, shouldn’t determine the value of the home they are selling.
  • The Home’s Original Purchase Price was High –The market may have changed since it’s original purchase, meaning that if there’s a downturn, the seller may achieve a loss. It isn’t, however, a reason to ask for a higher price.
  • Lack of Data – A good value basis should be on factual data of recently sold properties. The homeowner’s perceived value is likely to be biased and increase the selling price of the home.
  • The Seller Wants to Bargain – It is easier to negotiate to a fair market price when priced high, as generally, buyers often offer low to begin with.
  • The Homeowner isn’t Motivated to Sell – This is testing the waters. The homeowner isn’t highly motivated to move; however, if someone offers the right price, then they would. It is more important to price correctly, just in case the move becomes vital.

When a home is priced correctly, it is much more likely to sell quickly and for a better price than if it was priced high.

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Why Overpriced Properties Don’t Sell

Most potential home buyers have a price range specific to them. If your property is overpriced, it will appear outside of their price range. Price is one of the main factors influencing a buyer, and if a property is outside of their range, they usually won’t consider it. An overpriced home can even help to make other properties in the area sell because it makes them appear to offer a better value for money.

A property that’s listed on the market for too long becomes stagnant, and buyers believe that something is wrong with it, or the seller isn’t serious about moving homes.

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So, What is the Right Price?

The right price is simply the highest price that the market can take. Our team will research the current market and compare other properties in your neighbourhood. We will work with you to position your home correctly in the market to attract the most buyers.

Our experts have many years of experience in the real estate industry, and we are constantly up to date with the latest market movements. We can set a price for your home correctly the first time. 

For a Free Market Estimate

Contact

Larson Lambe Real Estate Group
Catherine Larson & Michael Lambe
2574 Blackwood St.
Victoria, BC V8T 3W1

Email: team@larsonlambe.com

778-400-LIST (5478)

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