Avoid Making That Big Pricing Mistake
Price will undoubtedly be the most important factor to consider when selling your home. When pricing that home, the question is always, "Should I price competitively?" vs. "Should I try my luck and see if I can make a BIG sale?" Let's take a look at both options:
(1) What do you think would happen if the real estate market suddenly shifted to somehow favor the sellers, and you'd based the pricing of your home off comparable properties in your area that by now were outdated (i.e. you've priced it too low by current standards)? In this case, you'd likely have an offer made on your home in a short amount of time within 98-100% of your original listing price. You may even find a number of competing offers that work to your benefit and get more than the original asking price. In fact, if you waited 30 or even 60 more days, you may have gotten around $5,000-10,000 more for your home but that's a big if. But your sale is now completed and you can move on.
(2) What if you decided to try your luck and list your house for a modest $10,000-$15,000 over the market value? Either you'll get lucky and the perfect person looking for a perfect house like yours will ignore the other homes in the same market and pay for yours without hesitation, or your house will sit for a while. No one can say for sure how long it'll sit for, but you'll likely consider a price reduction close to 30-45 days. If the market continues to move up and eventually catches on, then your home may sell in a few months' time. But what if it doesn't?
The truth is, buyers don't look at price alone when considering a home. An informed buyer will want to know how long the property has been on the market for. If it's been sitting on the market for a while, they'll want to know why and possibly jump to conclusions and assume that something is wrong with the property. This creates an unfair impression on your home.
Also, when buyers first view a home and decide it's not for them (regardless of their reasons), even a price-reduction on the same property will rarely invite them to take a second look at it. Lastly, being forced to reduce your price can lead to a slippery slope. After waiting for 30 days in a stale market, you won't be the only one who has to reduce their price. You end up chasing the market down and may actually get less than you would've if it was originally priced normally, thanks to potential fluctuations in the market. Now pretend it's 90 days (or more) later. By then you might've already bought your home and are now stuck with not one but two mortgage payments to make.
In the first example, where your home was priced too low, you sold your home very quickly, and made good on your goals. And if the market had gone up, you hopefully bought again to take advantage of the increase. Yes, you may have left a few thousand dollars on the table, but you ended up risking less.
Now, if you'd priced your house too high like in the second example, you had to eventually reduce your price, and possibly would've ended up with extra carrying costs (e.g. two mortgages) and caused your home to have a tarnished image. And if the market had gone up, you probably missed out buying again to take advantage of the increase. In fact, if the market went down (back in the first example), then you'd have to keep reducing your price until it became more appealing than the other similar homes in your area.
The key to successfully pricing your home is to consider your goals and figure out how soon you'd like to sell it. If you'd like to sell quickly, try pricing your home 1-2% below the market value, as a cushion for market fluctuations and to keep in line with your goals. Selling right at market value, you can expect to sell in the average selling time (depending of course on which market you're in). But selling an overpriced home will end in a stalemate (or even a loss for you). One analogy would be passing up a guaranteed cash payout after winning the lottery and going for the jackpot. You might be able to get it, if you're lucky enough, but at what cost, if you're not?
Request a free home evaluation to find out how much your home is worth on today's market. Feel free to contact us online or call us at 780-800-9644 with any questions you may have about selling your Edmonton home.