The three pillars of a successful sale are Pricing, Presentation & Location though some might say it’s Pricing, Pricing & Pricing and they wouldn’t necessarily be wrong. Proper pricing cures all ills, be they location, condition, stigma etc. But what is the proper price on a property? It’s the million dollar question that I learned early in my career when a potential client had five agents independently price his home. It was no surprise that he received five, different prices but it was a surprise the range from lowest to highest spanned $130,000.00. I can proudly say I was the highest price and I sold the home. But being the highest price was not my objective. My objective then, as it is now, was to do a complete analysis using all the data and influences I could to come up with the tipping point i.e. the highest price I felt we could manage with the asking price still being justifiable, taking into account all the market conditions at that time.
Since then I’ve priced hundreds of homes in all kinds of markets including stable markets, ascending markets and declining markets. Arriving at a price that satisfies both the Seller and the Realtor still seems to be the largest challenge when preparing a home for market. It becomes all the more confusing for the Seller when they get differing opinions of value from different agents.
The primary reason for this is it’s not a science. There’s no one size fits all formula. The analysis is dependent upon the skill sets and experience of the agent. This is where the variance is. Pricing is easier in a stable market but can become a real challenge in an ascending or declining market. When the market is going up, you can practically do no wrong. If the home is underpriced, the market will take the price up. If it is over-priced, the market may well catch up to it in a short period of time. Pricing your home in a declining market is a whole different story. The typical things we analyze become all the more important such as Seller motivation and timetables, amount of inventory both in the immediate neighbourhood and across the municipality, how fast homes are selling (days on market) and turn-over or churn rate (how many homes in a particular price range are selling in a defined time period vs how many are on the market). It’s also helpful to know what the Banks think since typically the home will go through the appraisal process once there is an Agreement of Purchase & Sale signed.
We describe 3 ways to price a home; at market value, behind market value or ahead of market value. These options should be discussed once Seller motivation and timetables are established. These strategies are important to a successful sale and also give the Seller some options toward achieving their goals. I believe it’s the Agent’s role to provide the Home Seller with good information, researched with integrity and to allow for different options to be presented so the Seller can make informed and intelligent decisions concerning which route is the best to take, all things considered.
If you’d like to discuss the pricing of a home you’re going to sell, or one you’re thinking of buying please feel free to reach out. You can call, email or text right on this website.