Retailers have long priced products just below a round number because, psychologically, $199.00 feels more like a deal than $200.00. Even if the difference is only $1.
Pricing strategies are also implemented in the sale of real estate. The number of zeroes might be different, but the rationale is the same.
Toronto real estate was once defined by “bidding wars” and properties selling over the asking price – in some instances, hundreds of thousands of dollars over the asking price. While these sales were driven partially by high demand, strategic pricing also played a significant role.
However, Toronto’s real estate landscape has witnessed a significant shift over the past couple of years. Because today’s sellers are facing completely separate market conditions, strategic pricing has become increasingly critical.
Looking to optimize your home’s market performance? Our strategic advisory services can help you achieve a smooth and lucrative sale. Call us at 416.441.2888 or reach us by email at evan@christensengroup.ca.
What Makes a Strategic List Price?
As a seller, pricing carefully is extremely important in capturing the most optimal results on your sale, particularly in today’s marketplace. Once you know your home’s value and have a price range in mind, it’s time to establish the “list” price.
Establishing an asking price with the intention of creating a “bidding war” can be a useful pricing strategy. However it requires considerable experience on behalf of the agent if it is to be successful, and it also depends heavily on the existing circumstances – which must be carefully considered before implementing this approach.
Like any strategy, pricing strategies can fail. When an agent utilizes an asking price that is below the market value range in order to create a bidding war; they take a risk that the market will reject the pricing strategy. And if that happens, the seller loses momentum in the marketplace – which usually means a loss of money.
Understanding the value of strategic pricing is crucial for amplifying your returns. Explore these resources to learn more.
- How to Sell Your Home Without Losing Money
- Why You Should Think Twice About Working With a Discount Agent
- The Perils of Unexpected Offers
Appeal to the Greatest Number of Buyers
As a seller, you want to appeal to the greatest number of buyers. One way to do that is to identify the Market Value Range of your property and then establish the asking price at the lower end of the range.
By pricing your property on the lower end of the value range, you might be able to generate interest from multiple buyers, however, it takes quite a bit of finessing to be successful. If buyers reject this approach, you’ve established the low end of the range as the likely point where your property will sell.
Be Search-Engine Conscious
In today’s day and age, it should come as no surprise that the vast majority of buyers start their home search on the Internet. Additionally, as part of this technique, they will be filtering their searches by budget.
So, pricing from a seller’s perspective is quite important. Buyers will not look too much higher than their budget permits. Price it too low and you will attract many buyers. But they might not buy. Price it too high and you might miss good buyers who won’t find your property in their Internet search parameters.
Focus on the Property
Occasionally, sellers (guided by their agent) will utilize pricing gimmicks in an effort to make their listings stand out. However, asking prices like $888,888.88 or similar does little to attract buyers.
At the end of the day, your goal is to showcase the property and to appeal to as wide an audience as possible. Buyers are looking for value. Being overtly playful with your asking price counteracts this strategy.
Looking to optimize the sale of your Toronto home? Explore these blog posts for strategic insights.
- How Agent Performance Impacts Sellers in a Challenging Market
- An Essential Guide to Property Values
Why Staging is Important in a Balanced Market
Have a Contingency Plan
Sometimes, sellers have a price expectation that is above market value. They want to sell their property but don’t trust the market analysis and want to “test the market”. In my experience, the market usually prevails and sellers will realize that the value they place on their property is often quite different from how a buyer sees things.
If my client is serious about selling, I always try to work out a contingency plan in case the property doesn’t go for the expected price. By having everything on the table from the outset, we can react to market feedback very quickly, remain competitive and get the property sold.
Don’t Let Your Price Get Stagnant
Listen carefully to your agent’s pricing strategy. It’s their job to know what works and doesn’t. As with any pricing strategy, be prepared to have an ongoing discussion about it with your agent. Pricing a home isn’t an exact science and it’s not a good idea to set the price and then just leave it there.
A lot of factors can come into play when selling or buying a home, and not all of them can be anticipated. A good agent will constantly re-evaluate market conditions and advise their client accordingly.
Selling your home? Our strategic advisory services can help you achieve a smooth and lucrative sale. Call us at 416.441.2888 or reach us by email at evan@christensengroup.ca.
