Okay pricing strategies when selling your home. If you've ever wondered how a realtor comes up with a value of your home, please keep reading because there's only 3 real strategies, no more, no less.
#1 Above Market Value
What I call the ‘needle in the haystack’ approach, ‘the pie in the sky’, or whatever the saying you want to use to sum up this particular strategy. This is where a realtor looks at the comparables and the recent sales and active listings, and they priced way above market value hoping to find that needle in a haystack buyer, the one that falls in love with the property and will pay the price no matter what it is. While these buyers are out that, they are few and far between. While the strategy could possible work but what usually happens is the listing will sit on the market longer than average, and more often than not, will not lead to a successful sale.
#2 Market ValueThis is where a realtor does his research, looks at the comparables both in current listings, past sales, and listings that have been terminated, and through this research, will price at market value, basically priced at what everybody else is selling at. This is by far the most common approach and works well to get market value for your home. Listings will sit on the market average amount of time and will sell for those market value prices.
#3 Below Market Value
This approach is the one I use almost all the time with my clients that I work with that trust me and trust the process. The third strategy follows the same research that's involved in 1 and 2, to understand what the market value is, and then deciding on a list price somewhere between 3 and 5% below the market value. What this does once a property hits the market is create an interest and an excitement, which hopefully leads to a frenzy of activity and multiple buyers wanted to place an offer. This will then often lead to different buyers competing, and more often than not will result in a sale price above market value, sometimes even to those ‘needle in the haystack’ prices that I mentioned earlier.
Real World Example
Just 5 months ago, I had a 50-year-old Vancouver Special in East Van, after discussing strategy with the seller it was priced around about 4% less than market value, which was about $1.5 million. This lower than market value list price did exactly what we wanted and led to 39 viewing appointments in the space of 3 days, which led to 6 offers and selling over $70,000 above the market value and my clients couldn't have been happier.
So, there you go, the 3 and only 3 different pricing strategies a realtor could use when selling your home. If this blog led to more questions on this subject, or if you're interested in the value of your home, don't hesitate to reach out to me directly.