The right listing price is one of the most critical factors not just in selling a home quickly, but to land the final sale price you're after. There are several different approaches you can take to determine the right price for your property. The one you choose depends on the strategy you plan on using to attract buyers, and also how much risk you’re prepared to take in order to attract offers.
Buyers don’t make offers on over-priced listings
Many homeowners think it’s a good idea to list a property at the highest price they believe the market can bear. They’ve seen what a few properties are going for in their neighborhood, so they add an arbitrary percentage on top of that to reflect where they think the market will be by the time they decide to sell in a month or two.
This rather optimistic approach is favored by sellers who want to ‘test the waters’ to see just how high the market might go. Their rationale is that they can try the high-end price first, and adjust it downwards later if they don’t get results.
As any real estate professional can tell you, this strategy can be a costly mistake. In the long run, overpricing your listing can deliver some potentially damaging repercussions.
Agents will be less likely to recommend it to potential buyers, which means your listing sees fewer viewings. Your overpriced property could be passed over in favour of other, more competitively priced listings; a surefire way to become lost in the noise and ultimately forgotten. Low visibility for your high-priced listing drastically reduces your chances to convert any curious prospects into buyers.
Getting it right the first time
Trying to solve the problem by dropping your listing price after the fact won’t help much. Not only will it not pack as great a punch as pricing it right the first time; it can, in fact, lead to a death-spiral of pricing problems. Subjecting your property to price reductions means it’ll linger on the market. And the longer a house is on the market, the more suspicious buyers become that something must be wrong. It’s human nature. This means you may have to lower your price even further to get some action. See the pattern?
Looking to really attract buyer interest? The best strategy is to set your initial price either at, or even slightly below market value. In areas of high demand, it isn’t uncommon to find the most sought-after properties being listed at under-market prices. If it looks too good to be true, that’s because it is. This tactic is meant to create the seller’s dream scenario – a multiple-offer bidding war.
So what’s the right approach when it comes to YOUR property?
Here’s where you prove its value. The first step would be via a comprehensive market analysis designed to help you arrive at the right listing price. A good report will show you what comparable homes in the area recently sold for, as well as the current listings now on the market. This is your direct competition; the properties you’re competing with for buyers - so choose your price accordingly. Remember to look closely at those expired listings. This shows you what prices the market will not bear.
Need help getting started? Get an Aurrow estimate. Our clear, easy to follow reports will help you make an informed choice that’s right for your market.