The first question that most of my clients who plan to sell property ask is, “What is my place going to sell for?” A real estate salesperson does not determine the sale price of a property.
The selling price for all properties is generally determined by market conditions at the time of sale. Market conditions include:
- Supply and Demand
Determining the sale price of a property is not an exact science. The best indicator of what a particular property will sell for is to compare it with other recent sales for similar properties in the area. This is generally referred to as a comparative market analysis (CMA).
A salesperson can show you what similar properties in the area have sold for and together you will determine what the asking price of your place should be.
Over the years I have found some common pricing misconceptions:
I know how much money I’ve put into this home.
I know what I need to get out of this place.
Our neighbour’s place sold for ….
I can always lower the price later.
When it comes to pricing your property please remember:
Buyers are more likely to view homes that are priced right.
Your price should be based on sold comparables rather than unsold comparables
Overpriced properties help sell other properties that are priced right
Overpriced properties take longer to sell and often end up selling below market value.
Many salespeople will suggest a higher price simply to secure your signature on a listing agreement. Agents generally refer to this as buying the listing.
Earlier I said that the sale price is generally determined by market conditions however periodically there are outside influences which have nothing to do with market conditions which may affect the sale price of a property. Outside influences include:
Emotion (a purchaser falls in love with a property and just has to have regardless of the price paid)
Business (a developer needs the property for a land assembly).
Pricing your property correctly:
- Insures greater exposure
- A quicker sale
- A higher sale price
Having your property priced correctly at the start of the listing period cannot be over emphasized. In all but the worst markets there is a pent-up supply of potential purchasers waiting for a suitable property to become available. Once this pent-up supply has viewed your property it will only be new prospective buyers coming to view your place. This will be a trickle compared to the number of initial showings when the property is first listed for sale.