Setting the Price

What is the right price?

First, the benefit of pricing correctly, in a nutshell, is that you put yourself in control with pricing. You generate activity and offers. If, through the negotiation process, you don't pull the buyer up high enough, you let the offer go, because you are in the driver's seat. Overpricing is one of the most common mistakes made, and it is counter productive-it has the effect of shooting the seller in the foot.

Why is pricing a fine-tuning exercise? There is a fine line between a property that is perceived to be fairly priced and a good house, and a good house that's too high, so it will probably be there next week.

Agents, taking their buyers from house to house in a particular price range, become acutely aware of this difference, and you are marketing as much to the agent as you are to the buyer!

Traditionally, in a typical market, buyer will view 12 houses before buying a home. That means, once you're on the list of homes to see, you're competing with 11 other homes. Apparently, in this day of the Internet, it's often just half that amount!

Price must be high enough to give you optimum profit and low enough to compete with the other homes in your neighbourhood.

The value of your home will be determined by the sale prices of homes similar to yours that have sold in your neighbourhood recently.

A good agent will pay very close attention to the recent market data, in order to help you establish the right price for your house. Adjustments are made for differences. I believe it's important to gather a wide range of data, including the stats of homes that are obviously higher and obviously lower, to provide the homeowner with the full picture of the current market.

Factors that affect pricing when comparing sold properties to yours.

The most important physical factors are:

Location and house type (apples to apples)
Lot size (frontage being the most important factor, particularly in the newer neighbourhoods)
Square footage (basement area not included) main floor sq footage tends to be more valuable than second floor

Adjustments are also made for:

Garage
Upgrades
Condition
Layout
Finished basement
Pool
Landscaping

How are these dollar amounts arrived at? It is not the cost of the improvement; it's the value that the market puts on these improvements, i.e. the price that a typical purchaser will pay for the benefit. These adjustments are market determined. Market factors that affect listing and sale price: Timing - This is one of the most critical adjustments. Appraisers, when evaluating a property, prefer to go back no more than 3 months, making adjustments, when necessary, for time. This is one of the most carefully evaluated factors. Timing factors include:

economic climate
supply and demand - buyer versus sellers market, greater demand than supply translates to a sellers market and great supply than demand translates to a buyers market.
competition- your local neighbourhood competition. What other homes are competing with yours?
time of year-are there seasons for selling real estate. Certainly! There is a pattern. The busiest time is usually February to end of May, mid -summer and November -December tend to be quiet.

Your Agent's Expertise - The skills of your the agent you have chosen will play a critical role in your selling price.