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The Briar Hill Group

Pricing Your Home – The Challenge

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.

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About Jane Johnston Personal Real Estate Corporation M.E

Jane Johnston was a winner of an VREB MLS® Silver Award in 2007 and 2008 and 2010, and MLS® Gold Award Winner in 2010. Jane was Pemberton Holmes' top new REALTOR® in her first year and has consistently been a top 1% performing realtor at Pemberton. Jane is focused on providing you with top-rated service.