The #1 Secret when Pricing in a Sellers’ Market

Most sellers can face various challenges when selling their home. One of them being pricing. The #1 secret when pricing in a seller’s market is simple but might be surprising to some of you: Don’t overprice.

Since we’ve been seeing double digit increases in the past year, it’s important to know your numbers and their recency. Most seller’s try to take advantage of the market they’re in and price their homes way above the market value, in hopes of receiving more money.

Some suggest to shave off around 15-20% of the your home’s market value and let the offers push the price above asking. In some markets this may be ideal, however this should be done after consulting your agent and considering the pros and cons.

Overpricing is tempting, but can backfire on the seller when done in unsuitable situations, and this is why not all listings are sold even in a sellers’ market. With buyers becoming more market-savvy and making the extra effort to understand the trends, they know when to hold back when they are being duped, therefore not falling into trap of paying more than market value. Then once the seller realizes their price is too high and reduces it, incoming buyers will assume the house is defective and that’s the reason behind its prolonged stay on the market.

Another mistake sellers make is assuming that the more time they have the higher they can list their home at, which is never a good idea. Time will not always be your friend when it comes to listing your home. Differentiating between past sales and active listings is an important distinction to make. Active listings are competition, however they are also a good way to gauge which prices are not going in the current market.

When a home is reasonably priced, it creates excitement in the first week which is the ideal time to take advantage of the situation. By the end of the week if your home hasn’t sold yet or worse, gotten an offer, you have priced it above fair market value. If after 2 weeks your home is not selling that’s dangerous territory, bringing you into the stale listings neighbourhood, which is never a good sign.

Think like a buyer: what parts of your home would you pay more for? Which parts of your home could potentially reduce the price? If you see something there’s a high chance the buyer does as well.  Pricing it too high will turn buyers way from your property immediately, and by then it would be too late to reduce it.

Ultimately listen  to your agent’s pricing strategy, as they are the real estate experts. Determining the price is an ongoing process, dependent on many factors such as the location, comparative listings & solds, market (which can be unpredictable) as well as multiple offers. Understanding your expectations at the beginning of the listing process is important, which will help minimize any disappointments in the future.