As you’re probably aware, the list price you set for your property has an impact on how quickly it sells — and how much you earn on the sale. What you may not realize is just how significant an impact it has. Consider the following examples.
You price your property well above its current market value. As a result, many buyers don’t bother to see it because it’s outside of their price range. Those who do see it are confused by the high price tag, (and may even be suspicious.) They may wonder, “What’s going on?”
In this scenario, the home will likely languish on the market for weeks or even months. You might even have to lower the price dramatically to re-ignite interest.
And you ended up pricing your property just a couple of percentage points lower than what is necessary to gain the interest of qualified buyers. That might not seem like much of a problem. How much can a couple of percentage points matter? Those points matter a lot.
On a $400,000 property, pricing your home just 2% lower than necessary could cost you $8,000 on the sale. That’s a serious amount of money!
So, as you can see, pricing your home right is serious business.
You price your property deliberately just slightly below your competition to anticipate much more interest. In today’s market specially in Toronto and Durham region this is now the going trend. A good realtor understand the market value as they all have access to the historical statistics of what property sold for in any given area right down to the specific streets.
You may be thinking why do all this? It’s simple! We are all driven by emotion and we naturally compete for our value preposition. When we see that there are nine people competing for the same house that we like and that same house we cannot live without our natural instinct is to outbid our competition. And this gives birth to the term “bidding war.” In a bidding war situation it is uncommon to see house prices go up to $60K – $90K above it’s asking price.
On the flip side caution must be taken into consideration. This strategy does not work all the time and only works best in the sellers market. Timing is everything when using this strategy. But the question is how to tell when to use this strategy and how to tell the signs when to “start” and “stop” using this strategy?
This is where a well train agent comes in handy. A realtor that knows the area very well and a realtor that is familiar with analyzing historical data.
Interested in learning more about this signs?