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One of the most important decisions you will make in selling your home is establishing the correct price. It will impact both the length of time it takes to complete the sale and how much money you will walk away with.
So what is your strategy? With cars and houses, everyone knows the asking price is just the starting point for negotiations. However, the similarity ends there. This is because while car dealers might put a higher sticker price than they really expect to get, knowing that buyers will negotiate down, that is usually a lousy strategy for a home seller. Most times, asking too much for your home will result in a final sales price that is actually lower than the estimated market value.
Why? This is because buyers will simply pass on an overpriced home. Eventually, the seller will cut the price. By now the listing has been up for some time. Buyers see that and assume there is something wrong and keep on passing it by. So the seller will lower the price again. Finally, the price will drift low enough that someone will get a great deal – but it will not be the seller.
Understanding your market can be the difference between getting top dollar for your property or watching it sit unsold. Speak to your Ping Property Agent to help you set realistic expectations about how long it will take and how much you will get.
Check market values
Your experienced Ping Property Agent can help give you a real-world idea of what is going on out there. They know what buyers are looking for in your neighbourhood.
If you are selling in a buyers’ market, do not despair. You will get to reap the benefits of it when you buy your next home. So once you have identified your market conditions, how do you respond? It is not just about setting your price. Again, it is about expectations.
Seller’s market
If you are in a true sellers’ market, the property should sell itself, right? Not true. That is because everyone looking for a property knows that only the good ones are selling quickly. In any market, listings that go “stale” will lose value.
It is also critical to plan your next move in a sellers’ market. If your home is priced right, it could sell much faster than you anticipated. Know where you and your belongings will go if there is an unexpected gap between selling your home and moving into your new one. Your Ping Property agent can guide you to decide what strategy works best in your particular situation and market.
Buyer’s market
Selling in a buyers’ market requires patience, flexibility and attention to details. As in any market, the first and best strategy to make top dollar is to research the competition and price the home right. In a buyers’ market, you will need to take a few extra steps to make your home stand out from among all the choices potential buyers have.
In any kind of market – buyers’, sellers’ or neutral – your best tools are planning, research and a knowledgeable Ping Property Agent. To learn more about your market, speak to your Ping Property Agent today.
Getting to the best price
So how do you set the best price for your home? First, you must understand it does not matter what you “need” to get. Speak to a Ping Property agent to find out how much you will actually pocket for a given sales price. That is good information, but it is not how you set your price. Forget what you owe or how much you want to walk away with. Not surprisingly, buyers do not care. Instead, you will need to take a cold, hard look at your home and the housing market in your area. Your strategy depends on whether it is a buyers’ market or a sellers’ market. So the first thing you need to determine is your home’s estimated market value.
Speak to a Ping Property agent for a discussion on comparable sales of properties in the area or nearby. That will get you in the ballpark and, just as importantly, it is a number buyers will look at. But do not stop there. Look at other available home sales listings in your neighbourhood.
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Pick a strategy
Once you have determined your home’s estimated value, you need to pick a pricing strategy. In a hot market, for instance, you might actually make more money by pricing your home slightly below the estimated market value to spur a bidding war or multiple offers. In a cooler market, that might speed up the sale but you will sell for a lower price. That is when you need to decide what is more important to you, time or money?
It helps to be superstitious, because a lot of buyers will be. Research shows that homes with “444” in the list price sell for 3.2 percent less than expected, so avoid that configuration. An experienced real estate agent has probably a better idea of the right pricing strategy and can advise you in minor changes to your list price that might make a big difference.
Consider the price range your home will be in. Most buyers have a range they are considering or can afford. A buyer looking at homes in the $800,000 to $1,000,000 range will not see your $1,005,000 home. But if it is priced at $888,888, they will see it and may fall in love. They may even be willing to go over their original highest amount in a bidding war.
Be wary of bidding wars
It is worth adding a note of caution about bidding wars. They can be great for the seller, but it is not like you should just pick the highest offer and move forward. You will want to examine each offer and each prospective buyer. If someone is offering to pay more than anyone else but their financing is shaky, that may not be your best option. If their financing falls through, you are left with a home that has to go back on the market.
But that does not always work out, and the lower-priced offers might have moved on. New buyers may wonder what happened with the sale that fell through. Is something wrong with the house that they did not notice? Carefully look at all aspects of each offer before making a decision on which to accept. And feel free to ask the higher priced offer to match other terms like quicker closing date or foregoing inspection contingencies.
Be realistic
But maybe you were overly optimistic and priced your home too high. (That over-rated designer interior renovation was less of a value-add and more of a turn-off for buyers than you anticipated?) Do not panic. You are not alone.
It is not unusual to see price cuts. The key is to recognize quickly that you have overpriced your home and make an accurate adjustment. You will still do fine. The sellers who really hurt themselves do so with a thousand tiny cuts. That is, they lower the list price little by little over a lengthy period of time. Older listings just are not as interesting to buyers and houses with a long history of price cuts just start to look stale. Better to make one bigger correction upfront.
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