9 considerations that typically affect your pricing
- An agent has no control over the market or average “for sale” prices, only the marketing plan.
- Never select an agent based on their recommended listing or sale price
- Overpricing in a “sellers’ market” is sometimes okay but over pricing in a “buyers’ market” is a recipe for failure.
- Four kinds of numbers are used to represent your property’s position in the marketplace:
- Cost — What was paid plus any capital improvements
- Price – What the seller wants
- Value – What the buyer is willing to pay
- Market Value – What a willing buyer and seller agree upon
- Of these four numbers, when your home is for sale, only the market value is of importance to the purchaser.
- Regression – An expensive house being decreased in value because of less valuable homes around it
- Progression – Selling for an above-normal value because there are more expensive properties or a very desirable neighbourhood nearby.
- Substitution – This affects the value of a home improvement and is based on the value added as perceived by the potential purchaser, not what it cost the owner to install
- Make sure your agent understands the philosophy of buying up in a down market
6 common reasons for overpricing
- Upgrades. Added since the property was purchased and which were purchased for the benefit and enjoyment of the seller and not for resale value. Some sellers want to include these upgrades in the asking price and this could mean the house is overpriced for the market
- Need. Some sellers may have a financial need. However, the need for money on the part of the seller does not increase the value of the home.
- Original purchase price was too high. If the seller paid more for the property than it as worth and the property has not increased in value or is perhaps worth even less.
- Real market value not considered. The seller lacks or chooses to ignore factual comparables used to establish real market value.
- Seller wants bargaining room. Listing more than 2% to 4% above market value actually reduces bargaining power.
- Move not necessary. Seller is not motivated to sell.
The biggest impression and most impact a property makes upon both potential purchasers help site and agents is in the first few weeks of the listing – pricing your home accurately and within 2% to 4% of market value is essential.