In this write-up, we will discuss the significant role of pricing in listing a property and how different pricing strategies affect the selling of your Property in the market.

For the Sellers, there is a host of items that one needs to take care of to put the home on the market and make it listing-ready. But nothing is more critical than the pricing strategy when you decide to sell a property.  

Pricing it right the first time is critical because, during the opening of 8-10 days, there is maximum exposure to the property when placed on a listing service like MLS®. Realtors across the board are actively looking for new listings to work with their buyer clients. As the property becomes stale on MLS®, it loses attention to time as other properties take precedence & come on top when Realtors conduct their searches while working with their buyer clients. And buyer prospects who are actively seeking in the market are presented with newer and more recent offerings on the market.

Secondly, the Realtors for their buyers always work on a set price range. Therefore, setting a price higher than fair value would essentially filter out the property in their searches for prospective buyers. As a result, you might lose the opportunity to show your property to otherwise qualified buyers for your home. For example, suppose your property's fair value is around $800k, and you list it at 830k. In this scenario, buyers qualified for a purchase up to $800k will not get an opportunity to look into your property. As it was listed beyond their range and didn't cut into their shortlisted properties.

Lastly, if we price it too low then it should be, you stand a chance of losing thousands of dollars that you could have received in exchange for the title of the property. The house would surely sell fast, however, we lost the opportunity for security at the price it deserved. For the scenarios where the property does come in range for a realtor working with a buyer client, if the Realtor is knowledgeable, they would know that the property is priced too high. The realtors prefer to show reasonably priced options active in the inventory and pass on the one priced aggressively. The buyers, too, tend to move towards moderately priced options.

For an owner, when it comes the time to sell a property it's a very challenging task to review it objectively. Our intent as a seller should be to maximize the exposure of your property and sell it in a reasonable time at a good price. In addition, the pricing of the home should be conducive to maximum showings to qualified buyers, increasing the probability of you receiving an offer from a prospective purchaser.

Three possible strategies for pricing we will discuss now, and based on the market condition and the property state, these can be adopted, no right or wrong but the one which works best for your case, we will discuss my recommendation as well:

Strategy #1
Pricing it Under Fair Value – This works in markets which more inclined towards sellers, where you want to achieve maximum footfalls in the initial few days in scheduled showings & open houses and aim to have a multiple offer situation created on the day of the offer presentation. Again, the inherent competition will get you to a fair value or probably more in a seller's market.

Strategy #2 
Pricing it Just Right – According to the property's fair market value; this approach works for all types of markets, whether they are buyer-inclined, seller inclined or balanced. When you adopt this strategy, you get exposure to the property to qualified buyers. And your value proposition is strong and has the upper hand in negotiations as you have priced it within reason. Your Realtor would require doing a bit of work here to prepare a comprehensive CMA (Comparative Market Analysis). This exercise is to determine fair market value; the CMA should be very detailed & objectively consider all the adjustments to the subject property from comparable sold in the last 60-90 days.

Strategy #3
Pricing it Over Fair Value – When you aggressively price your property when put into the market, the downside is that you lose qualified buyers and risk the ones who come to see with price point if they have a skilled realtor working with them.

This approach is adopted when the time is on your side and you are not in a rush; plus, you will have the upper hand in negotiation as the price has an inbuilt buffer for an interested buyer. Generally, this strategy would work for wow factor properties, where the properties have an abundance of upgrades right from the outside curb to the inside elements and finishes of the property. Such property can attract interested buyers willing to pay the premium for the updates & finishes. One downside of this listing strategy beyond fair value is that once the property goes stale with higher days on the market, it will sell even below the fair market value, which we could have easily gotten in the first place.

Strategy # 2 is the one I recommend to reach your goals fast and onto packing your bags and preparing for the next big move. This pricing strategy of pitching the property at the correct market value gets us the qualified and right interested buyer for a smooth selling experience and getting the price the property deserves.



Wish you all the very best! Reach out to our dedicated team at Elixir for any queries you have in Real Estate and we will do our best to help.


Mudit Mehta
Broker of Record
ELIXIR REAL ESTATE INC.
Off: 416-816-6001 | [email protected]