Pricing Your Home to Sell

What is your goal? 

When helping clients set a price we first try to establish their goal. Do you want to leverage the market, beat the market or exit the market?

Leveraging the market means taking advantage of current conditions, setting an asking price which will drive activity Time Money Balanceand showings and allow you to gain the upper hand in negotiations to get full market value. You can then use your cash position to negotiate on your new home. 

Selecting a strategic list price is one of the critical factors in achieving full market value. Ideally, you should list your home slightly above what it will sell for and slightly below your competition. This creates excitement and with a strong negotiator on your side you can find yourself in the power position regardless of market conditions.

Our team sold five homes for full list price in the first half of 2012. To the best of our knowledge that's the best record in the region. Also our days to sell was half of the average according to MLS statistics. The general market was certainly not hot and sales for high dollar amounts can only happen when you have a good pricing strategy combined with a well-executed marketing plan and skillful negotiation.

Beating the market is where you get above market value for your home. When supply is tight with the right marketing plan this is achievable. It is how prices rise quickly in a hot market. Once two or three homes sell for a premium it sets a new benchmark. You have to ensure you have the best or second best home in the category in your area and you price it no more than 5% over what you plan to get. Be careful about trying to beat the market when the supply and demand balance is not in your favour. More often than not, you will actually end up losing money.

In the Okanagan many of our clients are exiting the market. Either selling a second home, or moving into retirement homes. When exiting the market you must pay close attention to trends and try to predict where pricing is going. If you can make some well-educated assumptions about where the market pricing will be in three months you can make a better informed decision on whether to sharpen your price to ensure early exit or try for a premium. It's important not to hang on to a property too long in a down trend if you exit, because you do not get the opportunity to make it up with a purchase.

For many people, the primary goal in selling is simply to make a lifestyle change or to meet some financial needs. Of those the majority are selling and buying in the same market. For these people, a well thought out strategic price combined with a well executed marketing plan and skillful negotiation will always get them to where they need to be.

What kind of buyer are you looking to attract?

price-range1If you imagine a bull's-eye in the very middle is your perfect buyer. They want exactly what you have and nothing else. They want to live next door to their best friends, or perhaps yours is the only home in that price range in the school district. Whatever the reason, if you find the person who wants your place that badly you have hit the jack-pot. Custom built new homes will often sell for less than what they were purchased for a year later. This is because it was the perfect home for the people who bought it. The property was designed to meet their specific needs. They may not find anyone who likes it as much as them when they come to sell. It should be noted that even if you find your perfect buyer, unless they are cash purchasers, you will still only be able to sell to them at the top of the realistic price range. This is because banks will not finance homes where the value is not realistic. We believe for any home with unique appeal there is always a perfect buyer out there. The issue is, they may not be buying the same time you are selling and if they are, they could be still looking for high ratio mortgage. 

If you are committed to selling chances are you will not want to wait around hoping you can find an ideal buyer. Your goal will be to attract the comparative buyer to your property. If once again you imagine the target, the comparative buyer will pay a price outside of the bulls-eye but not at the outer edge. However, the faster you need to sell, the further from the middle you will list your property. The comparative buyer will judge your home against others and if on balance they like yours best they will bring you an offer first. Your job is then to negotiate as much as you can without pushing them towards their second choice.

If getting the home sold right now is much more important than getting a price towards the top of the realistic price range you will need to set an asking price closer to the edge of the bull's-eye. You will attract so much attention that it will either get multiple offers driving up the sale price, or you will get a lower offer from a wholesale buyer. This buyer is just making an unemotional investment and they buy property at the bottom of or below the realistic price range.

How do we define the Realistic price range?

As you can see the higher you go the less people can afford the home. Within the realistic range you must decide the risks and rewards of various strategies. Outside of this range too high the best REALTOR® in the world has a one in five thousand chance of selling it. Below this range the worst marketing plan in the world could not stop it selling. It is the 2-10% extra you can get through good marketing, skillful negotiation and strategic pricing that makes the difference. Getting that premium starts by setting a strategic price point.

Pyramid

There are two prices you must consider:

1. Predicted selling price.

2. Asking price.

Any of the top 50 REALTORS® in the region could accurately predict the selling price of most homes within a 3% range. We look at the same data a bank does when deciding whether to approve a mortgage: sold prices from similar properties with adjustments made for differences in value. Of course very high-end or truly unique homes are harder to valuate as the purchase price can become more subjective.  In the final analysis any home is worth what a buyer will pay, a seller will accept and if required what a bank will finance. No more or less. 

Asking price is a little more strategic and we will advise clients on a case-by-case basis of the risks and rewards of different strategies.  We like to list close to probable selling price as a rule. However, there are exceptions. 

Some of the things that affect value of a home are listed below. Note that things such as staging may not get you much more money, but could easily make your home sell ahead of others instead of sitting around for months. 

Strong Effect on Value

Moderate Effect on Value

No Effect on Value

What similar Homes have sold for recently in same local area.

Size of lot.

What you paid.

Site location of home.

Cost of recent repairs / maintenance.

Upgrades of a personal preference.

Style of Home.

Decor and staging.

How much you owe on the home.

Age of Home.

Brand of building materials and appliances.

 

Quality of Finish.

List prices of neighboring homes.

 

Quality of kitchen & bathrooms.

 

 


We can discuss these and other factors of your property in relation to other homes that have sold in the area and help you select a price you are comfortable with and that will help you reach your goals with regards to the transaction. Our clients consistently net more money in a faster time and we believe an important factor in their success has been a well informed, well thought out pricing strategy. 

Call us right now at 250.575.1432 or email by clicking here.