The 3 Prices that Sell a Home
by Dave Williams
Where will you price your home in this market?
Every home listed for sale has 3 Prices:
- The price that attracts buyers attention,
- the price that gets them in the door,
- and the price that sells the home.
I’ll start with the most important to you,
The Price that Sells the Home
As we’ve discussed in that previous blogs, Homes in Ottawa sell (on average) for 97% of their final listing price. That last bit is the important part, 97% of the “final” listing price. It’s common practice these days to reduce and re-list properties several times to get them into the range that buyers will make an offer.
No matter how attractive and polished your house, buyers are comparing its price with everything else on the market…and that recently sold. Recent American studies by their National Association or Realtors show that 90% of buyers are using the internet in their home search. (2012 NAR Profile of Home Buyers and Sellers) In this era of open data, it is very easy to compile data on sales for streets, neighbourhoods, even whole subdivisions and the buyers are looking at this for months before making a buyer decision.
This makes the likelihood of informed buyers very high, they know what your home is worth, they’ve considered
the alternatives and they know what it should sell for…and that is the offer they are going to bring you.
The price that sells your home is at most 5% above what a similar home should/has sold for in your area.
The Price that gets them in the door.
Your home may be the greatest thing to hit the market this year, but if no one walks in the door to take a look, nobody is going to buy your home.
Some sellers list at the rock-bottom price they’d really take because they hate bargaining. Others add on thousands to the estimated market value “just to see what happens.” If you want to try that and if you have the luxury of enough time to feel out the market work out a schedule in advance. If there haven’t been many prospects viewing your home after three weeks, you may need to lower your list price. If that doesn’t bring any prospective buyers, you may need to lower your list price again. Plan on doing that regularly until you find a level that attracts buyers. Make a written schedule in advance, before emotion takes over and you’re tempted to dig your heels in.
Sometimes cash incentives are as effective as lowering the price, especially in the lower price range where buyers may be “cash poor.” You may offer to pay some or all of a buyer’s closing costs and discount points required by the buyer’s lending institution. If you haven’t had much traffic through your house and you’d like sell in a hurry, you may want to add the offer of a bonus to the selling broker, in addition to their commission. An example of the wording for such an offer may be “to the broker who brings a successful offer before Christmas.”
So the price that gets them in the door may just include a special time sensitive offer, or simple be the best price possible in today’s market.
The Price that gets their attention.
As I mentioned earlier savvy buyers today are acutely aware of home values, estimates suggest a buyer spends 18 months online researching real estate, neighbourhood and prices before buying a home. Which leads me to ask “What are you competing against?”
Does a buyer considering Riverside South also look at Barrhaven? I’d say yes.
Only a small percentage of buyers we work with are committed to a neighbourhood, but the vast majority are only bound by their wallet. Just last week our buyers agent Keith Bray showed a couple homes in Barrhaven, Orleans and Kanata, similar homes in a similar price ranges. No longer are you just completing with homes on the block, you are also competing with homes across the city.
Just recently we had a home for sale, the only home of that style, priced better than the last comparable sale…and it didn’t sell…two week go by…people are coming to see the property but not making offers
So we asked the question, “hey Mr. agent who brought buyers through our home last week, did they buy something else.”
Yes, yes they did, they crossed the road into hunt club and bought more house for the same price from a new builder.
Suddenly not only was our property competing with other re-sale homes it was competing with next years homes too.
Asking the Question “What else can buyers afford for the same price?” leads us to some surprising answers about the price that gets their attention.
Next weeks tip: Marketing a Homes for Sale, it’s not about the home..?