Download Pricing Your Home-What To Consider

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Pricing Your Home: What To Consider In Getting It Right!
Aside from marketing, perhaps the most important element in the successful selling of your home, is
determining the listing and probable selling price of the property. The following is a brief overview of some
of the items that need to be considered when determining property-listing price.
If any questions arise during your review of this brief, please contact me and I would be happy to discuss
them in detail with you!
1. A REALTOR® Doesn’t Control Market Prices:
Therefore you should never select your Listing REALTOR® based on the price that they say
they can get for your home. The market for the property that you are offering for sale will
determine the ultimate selling price, not the REALTOR®.
2. Pricing in Rising & Falling Markets:
• Overpricing in a rising market may be OK (depending on how much of an overprice
occurs), as the market may ‘catch up’ to the list price.
• Overpricing in a falling market is disastrous, as the gap between the list price and the
market keeps getting wider. It’s therefore important that the REALTOR® consider market
trends when providing pricing assistance.
3. Regression & Progression Pricing:
• Regression - The phenomenon of an expensive house being decreased in value because of
less desirable homes around it or it being situated in an undesirable neighbourhood.
• Progression - Alternately, a home may increase in market value if it is situated in a
particularly desirable neighbourhood, or it is surrounded by homes of much greater
value.
4. Substitution:
• The value of an asset is partly based on the price of items that can be substituted for it. For
instance, the price of a house is partly determined by the price of other houses that have
similar features that could be purchased instead. Buyers will not typically pay
substantially more for a property that is a substitute for another that is
also available.
The following reasons are sometimes used to try and justify listing at a price above
the recommended market value of a property. Unfortunately none of these
reasons change the underlying market value of a property based on the
substitution principle, and homes that are overpriced end up unsold.
• Over-improvement – expensive amenities such as gold faucets
have been installed. Buyers will not pay extra for amenities
which they do not need.
(continued…)
• Seller Needs a Certain Amount of Money - the Seller's need for money does not increase
the property’s market value. No one would consider paying more than market price for a
car just because the seller needs more money, nor will they pay more than market price
for a house – buyer’s are not concerned with how much money a Seller personally
requires.
• Bargaining room • Buying in a higher priced area – this is the same argument as ‘Seller Needs a Certain
Amount of Money’, above
• Original purchase price was higher, or moving isn’t necessary, or corporate buy-out to
move an employee’ – Buyers are not concerned with any of these factors. They will find a
substitute if the price is too high.
• There’s a lack true current comparables.
DOM: Days on Market:
• The largest impression and the most impact a
property makes on the market, upon Buyers, and on
Realtors is in the first few weeks of the listing.
• Therefore, it should show the best and be priced the
best during those initial critical weeks on market.
Benefits of Pricing Close to Market:
• Faster sale.
• Less inconvenience because there will be a need for fewer showings.
• Attracts the ‘right’ Buyers – if priced too high, comparable properties that the Buyer sees
at the same price will be ‘better’, therefore the Buyer that is shown the property will end
up not making an Offer, and Buyers who might want the property if priced correctly would
not be interested
in seeing it as
they feel it is out
of their price
range.
• Increased Agent
interest and
response –
means that more
Buyers will be
shown the property.
• More response
to advertising
from the ‘right’
Buyers.