Does pricing a London, Ontario home slightly high and then lowering the price work? I hear this all the time from home sellers: “Let us list it high because someone will offer us less”!
That thinking worked years ago, but in today’s real estate environment, homebuyers have a tremendous amount of information at their fingertips with just a few clicks. Today’s buyers know prices, and if you list a house or condo for sale in London, Ontario, at too high a price, it could cost you.
The Price
When a home seller interviews a Realtor, it’s easy to get caught up in the excitement of choosing a sales price. If a seller can obtain a higher price for the home, it means more financial opportunities for them. Unfortunately, uninformed sellers often choose the Realtor who tells them they will list it at the highest list price or, worse, the lowest commission. This is, by far, the worst mistake a home seller can make.
Establishing Value:
The reality is that it doesn’t matter how much money a home seller thinks their home is worth. The only people whose opinions matter are the buyer who will make an offer and the appraiser. Pricing a house is part science and part art. It involves comparing similar houses in the neighbourhood, making necessary adjustments for differences between them, charting market movements, and measuring housing inventory, all to help determine a value range. This is the same method appraisers use to evaluate a house. No two appraisals are the same; they are, however, generally close to one another. There is no hard-and-fast way to determine a home's price in London, Ontario, and the surrounding area.
Is the Price Too Low?
Houses sell at a price a buyer is willing to pay, and a seller is willing to take. If a house is priced too low, the seller should expect multiple offers and can use them to drive the price to market value. There is little risk in pricing a home below its actual value and your client's valuation. The danger is pricing a house or condo too high and having it sit on the market for weeks, even months.
How It Starts To Go Wrong
The home seller did not interview more than one Realtor. They may have chosen the first Realtor they found online because of their very low commission, or a friend or coworker recommended them. The first Realtor priced their house at $795,000. After 90 days of sitting on the market, the listing expired.
It Continues To Go Wrong
The Realtor they hire lists the house for $775,000. A few weeks later, the price drops to $765,000, but no offers are made. A few people looked at the house, but no serious buyers came forward.
The Home Owner is Now Tired & Exhausted
The home seller and the Realtor then priced the home at $737,000, and it sold very quickly. The sad part is that the comparable sales in the neighbourhood fully justified a price of $755,000, but the home had been on the market for too long at the wrong price, and now the market had slowed.
Protect Yourself
The question is, how much money does an expired listing cost the homeowner? The financial losses often exceed the extra mortgage payments made and extend beyond the cost or hassle of keeping a home spotless during the listing period. It affects the price a buyer ultimately pays because it is no longer a “fresh” listing. It’s now stale, dated, a home that was overpriced for too long.
Don’t let it happen to you. Don’t be that seller of an expired listing. Be sure to hire a professional Realtor to price your home correctly from the beginning.
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