Even though you may not consider it that important, setting the right ask price is arguably the ...
...in the entire home selling process. You may believe it doesn't
much matter, that a prospective buyer can offer whatever they want, that
your ask price is almost irrelevant. Well, it most certainly is very relevant. It can make the difference in not only how long it takes to sell
your home - if it even sells - but also what final sale price it
actually achieves. And it's true whether you hire a professional realty agent or go the private route.
Price too high and there's no buyer interest. By setting the listing price lower, but still too high, you may get attention and showings. However, nobody makes an offer because they still feel you're unrealistic when compared to other recently sold and currently active listings of similar homes. Remember that buyers now have the benefit of advice from their own agents, as you did with your listing agent. Set a list price too low, though, and you could conceivably under-sell your home. Happy buyer, but not so much a happy seller.
In a strong seller's market, a popular listing method is to deliberately under-price the listing and delay the presentation of offers for a few days. This works well in hot seller markets or for special properties in large cities or suburban areas. Employing such strategy encourages multiple bids designed to generate a sale price in excess of the listing price. But beware; without the correct circumstances, it could back-fire. You need a competent and trustworthy agent, a unique property in a prime area and a seller's market. Call it ...
During a buyer's or a balance market, the ask price is still important as it means attention - or not - from consumers and their agents. A reasonable asking price sends the clear message to agents that you're fair and reasonable. It also means you've been informed by an honest, experienced agent. In turn, buyer agents are encouraged to show your property.
The traditional method employed by most agents
when listing a property for sale is to simply agree with their seller's often unreasonable demands for
an unrealistic listing price based on the homeowner's subjective opinion
of value. The agent believes they have no choice but to agree to their
client's ask price, and then pray for a miracle. Having complied, the agent may already be planning the first of possibly several
price reductions. Or at another level, they may secretly hope to
generate buyers from the lawn sign and sell the callers into some other
listing. Not exactly what I'd call great service.
Whenever I found myself in such an unfortunate situation, if I agreed to accept the listing, I'd typically tell my seller to be prepared for a price reduction two weeks hence. But lets just try it for awhile, they'd say. So, I try. Nevertheless, I've experienced such scenarios countless times and my prophesy has usually proven true. The problem is, though, that with this strategy, the seller misses the golden opportunity to take advantage of the ...
... in the selling process - the first two to four weeks, longer in slower markets.
At any given time, there are always buyers searching for homes. Thanks to the fantastic exposure provided by the Internet, they've already discovered and maybe viewed all the current listings in their target area - and rejected them. Now, they're checking only the brand new listings. And if your listing appears in their or their agent's search window, but feel it's over-priced, they reject it too.
It's not like the old days before the introduction of the Internet with its multiple photos and virtual tours. Years ago, buyers physically viewed virtually everything before making the decision to either offer on or reject a listing. And when they offered, it was often very low. Standard procedure.
Nowadays, most listings sell within five percent of asking price, sometimes very close and occasionally over list.
Therefore, if your list price is too high, you'll likely have to reduce it. Regrettably, though, you've missed the best marketing period. Now, your listing is becoming stale. A buyer often asks how long a property has been available. If the answer is two weeks or less (or the corresponding period of time in your market area) and they like it, they often make a reasonable offer. If they feel it's been around too long, they'll wonder ...
If they're still interested in making an offer on a stale listing, count on it being low. Nobody wants to over-pay.
Listings that have been around since Methuselah - with numerous price reductions or none at all - will often sell at a price below what might have been obtained if the seller had accepted reality in the first place and set a fair ask price. Or they expire unsold. There are countless expired listings. Generating an offer early in the game usually translates into a ...
... because the seller is in a far stronger negotiating position. Plus the buyer will want to avoid competing with other buyers.
After establishing a reasonable market value expectation, determine an ask price that will attract the attention of not only buyer prospects, but also buyer agents who are always seeking new product.
By no means base your asking price on what the neighbour wants for their own home; it may be over-priced. Think independently. Determine an estimate of fair market value first - then set your asking price.
If you're trying a private home sale, it's still important to put your best foot forward with a realistic ask price. And keep in mind that private buyers expect to buy your home for less since they know you'll be saving a lot of money due to the absence of any real estate commission.
In any case, it's wise to step into a buyer's shoes. Set a fair ask price and move on with your life. The market is rarely wrong and will likely not give you more than fair market value. Period.
To learn more about selling your home and the importance of setting a reasonable ask price, visit the Canadian Real Estate Association.
If you're considering selling your home - with or without the assistance of an agent, check out my book The Happy Agent. It contains the sum total of the real estate knowledge, philosophies and techniques that I've accumulated, practiced and polished during a highly successful 42-year realty career.
Learn how to effectively
evaluate your home and prepare it for market to maximize the ultimate
sale price, how to
market and advertise effectively, how to handle showings and open houses
like a pro, how to
successfully negotiate an offer and more. Plus you'll learn to recognize the signs indicating when it's
time to throw in the
towel and hire a professional.
When you consider the huge
possible savings in
real estate commission with a private sale attempt and the fact that
you're probably dealing with your largest single financial asset, a small
investment of your time and a pittance of your
money could save you many thousands of dollars and a ton of heartache. At the very least, you'll be
encouraged to try it alone, at least for awhile. Remember - knowledge is power.
Available virtually everywhere print and e-books are sold.
A must-read for anyone contemplating a realty career and the perfect antidote for agents seeking a more productive, less stressful direction for their own realty business.
It’s also designed as an insightful resource for home buyers and sellers curious about the ins and outs of buying and selling real estate.
"An inspiring and candid tale of one man's journey to success as a real estate agent and achieving inner freedom. This book is sure to ignite the passion and holds the key to unlocking the power that lies within us all." Gina Ceci, Real Estate Lawyer