Pricing Your Home Correctly, The First Time.

What is the first thing you look at when you see a house for sale? Aside from the picture, you are probably scanning the listing for the price which makes it one of the bigger factors in marketing the house. So when it comes time to sell your house, there are certain strategies to consider when you are choosing your list price. Generally speaking, the list price of a home for sale is going to be in one of three categories:

• Priced to sell quick
• Priced within market value
• Priced to set the neighbourhood record

There are pros and cons to each of these strategies, and the one you choose is going to depend on your circumstances as a seller, as well as what is happening in your local real estate market. Keep in mind that in Ontario, sellers are able to accept or reject any offer at their discretion regardless of the offer price.

Pricing to Sell Quick

Sometimes the value a seller sees in making a quick sale, is higher than trying to hold out for top dollar. Perhaps they are an investor and need the capital to make a move on another project, or something as simple as not wanting to keep the house “showing ready” for any longer than necessary.

When the inventory of comparables is really high and days on market are in abundance, sometimes the way to separate yourself is to try and under price the competition, but this could backfire if you don’t get the other parts of your marketing strategy on point.

Conversely, this strategy does seem to work really well when demand (number of sales/buyers) is high and supply (active listings) is really low. Over the last half of 2021 and first quarter of 2022 we had very low inventory, so we saw houses listed at incredibly low prices to entice multiple offers and create a “bidding war” to try and get highest and best offer possible.

Pricing at Market Value

This is usually considered the “safe” route but that doesn’t mean you are not marketing aggressively, or leaving money on the table either. You are still listing your home competitively using a price that is based on the most recent sales data from other comparable solds in your area. So if your neighbours sold their home with similar features and square footage, they would have set the “market value” bar for your home if you were to sell.

Pricing at market value does set the exceptions for the buyers accordingly. They should know what other comparables have gone for recently, and any listing with a market value price should pair down the negotiation time as well. Your days on market on will most likely be in line with the rest of the comparable solds so this strategy is right for those that do not need to sell urgently.

Pricing to Set the Neighbourhood Record

Go big or go home! If your home has updates and features that set it apart from the rest, this is usually when you would want to test the waters and see if demanding a premium price will work. Marketing is usually all hands on deck, out of the box advertising and “mega open houses” to showcase your home in the best possible way which in turn should produce the price you are hoping for.

Real talk time: This is not a recommended strategy if there isn’t that “wow factor” that either your house, building or neighbourhood provides that commands that extra top dollar. It can end up being the ultimate practice of patience vs price. More often than not if an offer doesn’t come in after the first couple of weeks on market, the price is probably the deterrent and the market is telling us that an adjustment should be made to the list price to attract more buyers.

Choose Wisely, and Reap the Rewards

Real Estate is never a one-size fits all situation, there are plenty of reasons why sellers decide to go one way or the other. I take the time with my clients to go over the approach that I believe is going to work best for their situation, and most importantly the “why”. The seller still has full control of the price that ends up on the listing, but the saying “you only get one shot at a first impression” is very true when it comes to real estate.

Choosing the correct list price strategy the first time will help ensure that you avoid pressing the reset button and having to start over with a new list price weeks into the process.