Three Things – Considerations before Pricing

Many of us (myself included) tend to follow market statistics — each month waiting for the REALTORS® Association of Edmonton to publish the monthly MLS® satistics so we can begin our monthly ritual of digesting the data, make attempts to draw conclusions about what is happening in the market now, and from there endeavour to predict what will happen in the coming months. Some REALTORS® (myself included) make the numbers available to Clients and prospective Clients as quickly as possible. As I’ve alluded to before, I am unaware of anybody capable of predicting the future with any degree of certainty and I believe buyers and sellers should be weary of anyone that guarantees where the market is headed.

With all of the updates, speculation, and the I-know-what-the-market-is-going-to-dos out there it is easy to lose sight of some basic facts. With that in mind, instead of crafting another market update or market prediction post, I thought I’d jot down three things prospective sellers may wish to ponder while they are trying to figure out what their homes may be worth.

First Thing – Stats are only a guide
…don’t get seduced by market statistics…

Second Thing – Remain objective
…don’t let your needs or wants get in your way…

Third Thing – Get a second opinion
…consult more than one professional before jumping in…

Stats are only a guide: Market statistics (over time) can begin to paint a picture of trends and may provide insight into where the market is headed however, don’t forget that all the statistics you see are historical. They show what has been happening, not what will happen. Look at the prices from last year — based on the rise from January to May, would you have guessed prices would drop in June? Would the drop in values between July and September have led you to believe we’d realize increases in October and December? You need to evaluate in real time what is happening with the market when you price your home for sale. You need to promote what your home has to offer over the competition; for many home owners that tends to be a better price. That is your ace in the hole. Sellers tend to overlook the fact that what their home has for features is present in many other homes on the market that are competing for the same pool of buyers. When the market is competitive your best advantage is often price.

Remain objective: It is easy for home owners to inject their emotions, memories, and feelings about their current home into the sale price. How often have you heard (or even thought yourself) “My home is nicer inside than that one”, or ”I have more upgrades than that one”, or ”My neighbour told me that one is in terrible shape so mine must be worth more”? Remember, just because you want or need to get a certain amount for your home does not mean someone will pay it. Think of it this way: if I took you to see a home and you liked it so much you wanted to write an offer on it but I told you it was $20K overpriced, would you pay the extra $20K to get it because the sellers told us during negoatiations they needed to get their price so they could afford to buy their new home? Of course you wouldn’t. When it comes right down to it, you cannot justify overpricing your home just because you need to realize a certain amount from the sale of your home. Focus on your goal and what you have to do to get there.

Get a second opinion: As with many big decisions in life, you should always get a second opinion. During listing presentations I’ve had potential Clients tell me the price I am suggesting for their home is lower than what another REALTOR® has told them. My response is always, “Tell me how they justified that price to you”. You should be able to ask your REALTOR® general questions about how the price was determined and you should expect answers based on logic and fact. After hearing the answer(s), you should feel comfortable and confident the price that is being suggested is the right price (even if you don’t like what you hear). You have to be comfortable with and confident in the REALTOR® you choose and if you’ve never met your REALTOR® before, how can you tell if he or she is full of it? Maybe they were a referral from a friend who had a great experience. Fantastic, but that doesn’t mean should follow along blindly and automatically sign the listing contract. Isn’t it worth another 90 minutes of your time to get a second opinion and make the right choice the first time?

Price is one of the most important determinants in whether you will sell your home in a timely fashion or not. I take great care in arriving at the appropriate and fair price for my Clients’ homes and there’s nothing I hate more than someone who hasn’t done their homework or who is fishing for a listing. Believe it or not, there are some REALTORS® that will list a home at whatever price the Client pushes; either because they don’t have what it takes to give the seller the truth or so they can get the listing. Once they’ve got the listing and things aren’t moving, they will begin to solicit the seller for a price reduction, citing the fact the home is likely overpriced and that is why there isn’t much activity.

In closing, use available market data as a guide, try to keep your emotions out of it, do your homework, and choose the right REALTOR® for you, and you should be okay – in any market.

///…CP