BONUS TRUTH - The "High Price Tactic"
This is another truth regarding Real Estate that I am sharing with you. Beware
of the high price tactic. It has been used for years and continues to hurt uninformed
sellers. Once you read this page you will not only be able to see when and why
this strategy is being used on you but now you will be able to profit by avoiding
it! This tactic is also called "Buying Your Listing".
HOW YOUR ASKING PRICE AFFECTS YOUR SELLING PRICE
There are 4 common strategies that most sellers use to price their homes. It
is unwise to assume that a higher asking price will net you a higher selling
price. In fact, often this equation works in reverse, especially if you're not
paying attention to what the market is telling you. Remember, you cannot "fool
the market" with a high price. Please consider these facts when you
set your asking price.
- Clearly Overpriced - Every seller like you wants to realize the most
amount of money they can for their home, and every real estate agent
knows this. If more than one agent is competing for your listing, an easy
way for the agent to win you over is to over-inflate the value of your home.
Often we see new listings that are priced at 10 - 20% over their true market
value. This is very unfair to you - and once you are listed with the agent
who convinced you to go with the high price, that agent will constantly ask
and pressure you for price reductions in order to sell... ouch!
This is the "High Price Tactic" and is clearly not in your
best interest, because in most cases the market won't and can't be fooled.
As a result, your home could languish on the market for months, leaving you
with a couple of important drawbacks:
- your home is likely to be labeled as a "troubled" house by other
agents, leading to a lower than fair market price when an offer is finally
- you have been greatly inconvenienced with having to constantly have your
home in "perfect showing" condition for months ... for nothing.
- homes that are clearly overpriced often expire unsold, forcing you to go
through the whole listing process all over again, often with poorer results
than had you listed at the right price in the beginning.
- Somewhat Overpriced - Often about 3/4 of the homes on the market
are 5-10% overpriced. These homes will also sit on the market longer than
anyone would want. There is usually one of two factors at play here: either
you believe in your heart that your home is really worth this much despite
what the market has logically indicated (after all, there's a lot of emotion
caught up in this issue), OR you've left a little too much room for negotiating.
Either way, this strategy will cost you both in terms of time on the market
and ultimate price received.
- Priced Correctly at Market Value
What is Market Value? " - Most sellers understand that real estate
is part of the capitalistic system of supply and demand. They will carefully
and realistically price their homes based on a thorough and complete analysis
of other sales and the "competing" homes on the market. These competitively
priced homes usually sell within a reasonable time-frame and sell very close
to the asking price. When your home is priced correctly, it should sell for
97% to 99% of asking price!
- Priced Below Market Value - Some sellers are motivated and require
an instant or quick sale. These homes attract multiple offers and sell fast
- usually in a few days - at, or above, the asking price. Be cautious that
the agent suggesting this method is making this recommendation with your best
interest in mind.
HOW TO GET THE PRICE YOU WANT (AND NEED) FOR YOUR HOME
- When you decide to sell your home, setting your asking price is one of the
most important decisions you will ever make. Depending on how a buyer finds
your home, price is often the first thing he or she sees. Many homes
are discarded by prospective buyers as not being in the appropriate price
range before these homes are given a chance to be shown.
- Your asking price is often your home's "first impression", and
if you want to realize the most money you can from your home's sale, it is
imperative that you make a good first impression.
- Because this is not as easy as it sounds, your pricing strategy should not
be taken lightly. Pricing too high can be more costly to a home seller as
pricing too low. Taking a look at what homes in your neighbourhood have sold
for is only a small part of the process, and this on it's own is not nearly
enough to help you make the best decision for yourself and your family.
Mark will guide you through the process and other items to consider.
- The information I give you here will help you understand some important
factors about pricing strategy to help you not only sell your home, but sell
it for the price you want.
PRICING STRATEGY STARTS WITH GOOD INFORMATION
Before you can begin to know what your home is worth, you should do some research,
bearing in mind the following:
- An analysis of what homes have recently sold for in your neighbourhood is
NOT enough to help you properly price your home. A quick scan up and down
the street at the prices of homes that have recently sold will give you a
starting point. However, this is not nearly enough for you to base your entire
pricing strategy on. It is most important for you to understand how buyers
look for a home.
- Go back in your memory and think about how you conducted your house hunting
search to find the home you are now thinking of selling. You most likely did
not confine your search to a single neighbourhood, but perhaps you looked in
different neighbourhoods or areas in order to find the home that best matched
your needs and desires.
- The prospective buyers who will be viewing your home, will conduct their
searches in a similar manner. That means they will be comparing your home
to, for example, brand new development homes, century homes, 10-20 year old
homes, etc. They will also consider different locations such as homes in established
neighbourhoods, the middle of town, the suburbs or possibly even country properties.
Each home will have a different look and feel and it's quite possible that
a prospective buyer might consider all of these variables in the search for
- You can see that, when you're selling your home, you're not just competing
with the home around the corner, but also with all homes in other areas which
have the same basic characteristics: i.e. number of rooms, overall living
space, features and extras, etc.
- Remember the importance of understanding buyer behavior when pricing your
- Your asking price should be competitive with EVERY type of home that shares
the same basic characteristics as yours.
- To come up with a competitive price it will take a fair bit of research
on your part and mine. Shall we get started?
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