Errors In Pricing: Crucial Mistakes
Price is going to be the most crucial factor you'll have to decide on when selling your home. The issue of should you list your house at a competitive rate, or shoot for the stars and see what lands is a tough call. We'll explore each method below.
Consider if the real estate market has repositioned itself suddenly. Now, your carefully set price that is in line with the similar properties in your area is no longer in line with the norm. The price you set is now outdated, i.e. too low. In a case like this, a home seller can expect to receive a number offers fairly quickly, teetering around 98-100% of your asking price. In fact, several competing offers may present themselves driving the closing price above your original listing. There is a chance you could have got up to $10 000 more if you had waited a month or two, but that's an awfully big "if".
Now, let's say you're going to try shooting for the stars and price your home up to $15 000 above the market value compared to similar home. Of course, there is the off chance that some poor, star-struck soul will fall in love with your home, despite similar homes being priced nearby for less. But cases of tunnel vision like that are rare and you are more than likely going to be looking to reduce that price in less than 45 days to put place it in the same orbit of similar, nearby homes. But what if the market upswings - in 2 to 3 months the market may shift, bringing the prices of other similar homes back in line with yours. The market is a fickle beast and can be hard to predict..
There are plenty of factors to consider. When looking for a home, buyers don't simply look at the price, independent of everything else. They will want to know how long a home has been on the market and if it's been a while, they'll be looking for reasons why, always assuming the worst. Now we get to why picking the right price from the get-go is so important. When you begin to lower your price it becomes a bit of a slippery slope. If you lower the price after 30 days from the initial listing, you could also be looking at other properties doing much the same, resulting in your listing price still being higher. You can potentially get caught in a race to the bottom which is in nobody's best interest at all. Also, as you look to reduce your price again, you can already be looking at somewhere in the realm of 90 days on the market. Why has that house been on the market so long? Something has got to be wrong with it, right?
In the first example, you were able to make a quick sale and got on with your life. You may have lost a few thousand due to the upswing in the market, but you've now moved on now in your new home. With the second example where the home was priced too high, you had to reduce the price and the protracted selling process has ended up costing more in carrying costs (i.e. a second mortgage), plus, your home has gained a certain stigma for being on the market so long. Also, with such a long process, you may have missed the opportunity to take advantage of that market turn when buying another property. In fact, you may find that this drives the price of your home down even further, just to close that sale.
Are you looking to sell your home quickly? The first step is to figure out how long you can wait for it to sell. By setting a listing price that is 1-2% below market value, you can ensure a quick sale and also protect yourself from market fluctuations. By setting the price at market value, the selling period will likely be at the average selling time for your area. Overpricing your home really doesn't benefit anyone. There is a remote chance that you might get lucky and get your asking price but the more likely result is a protracted selling period and a price far below what you had hoped. Do everyone a favour and put some serious thought in when it comes to listing your home.
Contact us for expert advice when it comes to selling your property in Calgary.