When
people sell their home they want the best possible price for house so that they
can move on comfortably into a new home, with money to spare. The people most
affected by this are older people likely moving into the residence where they
want to retire and are on a fixed income, but the sentiment of "sell high,
buy low" is shared by everyone. In a fast-moving market like the one we
had a few years ago we could do that... and, across the seasons in Greater
Victoria one can buy lower in late November/early December when other buyers
are generally not looking and/or work with a REALTOR® who will scour the market
for deals for you. So, that being said, how does a seller determine the best
possible listing price with their REALTOR®?
The answer is that the price is negotiated usually two times in a listing. The
first is at the date of listing. At that point, the listing REALTOR® takes a
snapshot of real estate in the area and does a comparative market analysis.
Together the REALTOR® and seller look at the other product listed and compare
it to the sellers home. As a REALTOR®, I look at not only the listing price,
recent sale prices so I see what the comparabes sold for and in how many days
they sold. Sellers are usually familiar with what others are asking and want to
ask the same price as other listings, but looking at selling price is more
instructive. If the homes are selling fast, then there is a likelihood you can
list a little higher. But, what if the homes are not selling? So, asking prices
are high, but selling prices are considerably lower with long days on market.
This indicates over-pricing of listings.
Therein lies a problem: Everyone else is asking more and not getting it, and
selling price is lower. So, how can we, as sellers, take advantage of that?
Sellers usually, at this point, say to me that they don't want to list too low
as they will be missing out on the money. However, when the market is balanced,
listing the house at the estimated SELLING price is advantageous to the SELLER.
In the end, the seller will get more money by pricing it at the selling price.
How is this so?
Let's say that we have a home that is worth $815,000 based on the market
analysis, the trim, the number of garages and finished square footage etc. All
other homes in the area have been selling around $799,000. The listing agent
realises that the listing is showing better than the other $799,000 homes and
has extra features like completely renovated kitchens or new roof that show
better than the other listings. The Seller wants to list at $815,000 thinking
that a buyer will knock them down but the agent suggests $799,000 thinking they
will get a better price.... why?
When one goes to realtor.ca and does a search of properties they pick a search
range determined by the designer of the realtor.ca website. When using
realtor.ca website, buyers are given the choice for every $25,000 up to
$500,000 and thereafter the price range goes up by $50,000 until $1,000,000
wherein the increments increase to $100,000. Combine this with the thought that
every $100,000 mark is a psychological barrier to buyers and a physical barrier
on the search engine.
So, given that, if we list the home at $799,000 and people know it has the
finishing of a much better home than that... then we are likely to get waayyy
more viewings than if we list it for $801,000 or $815,000. In fact, if the
listing REALTOR® then markets the home well and gets many people through in the
first few weeks, then we are likely to get multiple offers and sell the home
for more than asking price. We'll get competition and belief in the value as
others see and hear how many people are thinking this home is a great deal.
Likely the house will sell over asking in this case (as some of my listings
have). However, if it sits on the market at $815,000 then over time they do a
price reduction, then likely the house will be reduced to $799,000 and the
number of viewers will decrease... people will wonder what is wrong with the
house and the sale price will be under $799,000. These facts are supported by
documentation from the Victoria Real Estate Board.
The second time a price is negotiated is at the time an offer comes in. So,
with shorter days on market, the listing agent and the seller feel confident
and have less tolerance or price elasticity. They are more likely to get asking
price or more. And, because a well priced home will generate a lot of viewings,
then a good agent will work towards generating multiple offers by keeping
everyone advised of offers and bringing in more buyers.
Working with a REALTOR® whose experienced working with both buyers and sellers
will put you at an advantage in today's market as we see what the buyer's
perspective is of the properties we are viewing together, and we can then price
your home well so you get the most amount of money for your home.