Real Estate Pricing strategy and psychology DO NOT need to be handled like the above emoji images! Not when you understand the ins and outs of what matters when selling a home or condo in Toronto.
The Toronto real estate market has certainly shifted since the spring of 2017. Condos went way up in value while homes dropped, levelled and are now back on the upswing, albeit a more moderate growth pattern. So where does this leave the sellers? How do you price a home or condo to sell? This is what I call the Real Estate Pricing Strategy. Without a good real estate pricing strategy, there is absolutely no way you can possibly get the most amount of money for your home. I see failed pricing strategies all the time. Ultimately what the seller doesn’t know can hurt them or at least their wallet!
Humans are a hyper-visual species. Images grab our attention very quickly. The old saying of “a picture says a thousand words” is a good insight into how we are wired. We are also wired to look for value, to pay less than something is worth as we want to protect our hard earned money. It triggers our survivalist instincts. When you add our heightened awareness to images and a desire to save money it becomes abundantly clear that there is a psychological aspect to pricing.
The asking price is the second thing that buyers see (the first is the image of the home or condo, obviously) if it is low then the value aspect is triggered, “I can get a deal” interest is increased! If the asking price is high, then the buyer may say “nice property but, there is no way that I am paying that much for that place!”. That first buyer impression must be on strategy, it is essential. If your real estate pricing strategy is lacking the appropriate psychological insights you are dead in the water. I see it all the time!
We are simple creatures, get us emotionally attached to something then all of our rationalities go out the window!
Pricing For A Bidding War – Choose carefully here. Know your downside. If the wrong strategy is implemented to underprice your property and you don’t get an offer it is very difficult to raise the price of your home. This price increase is not well received by Realtors. It is blood in the water, they will circle and attack. When selling you want to entice the most people to walk the home or condo. You must entice these buyers to have a look, to get emotionally attached to space!
You don’t want to go too low as it may be overlooked in the property matches. If you price a home at $500K in a neighbourhood where houses sell for $1.5 mil you will get dozens of horrible offers and you may not have notified the true buyers who can afford the price point as it didn’t pop up in their price range search.
The other side of the coin is picking a listing price that is too close to the actual value and expecting multiple offers. This backfires a lot for those inexperienced realtors. Buyers presume that the sale price will be far higher than the asking price (in this case actual value) so they stay away, thinking that they could never afford the eventual sale price. The listing agent and the sellers are left holding the bag on offer night wondering what went wrong.
Luxury Houses & Condos – 2018 is a year to buy your forever home. The real estate market over $2.5 million is slower than we have seen. There have been some deep discounts compared to previous years. This won’t last for too long. Considering that it is a little more challenging to sell Toronto’s Luxury homes it is essential to have the right strategy to pull on the buyer’s psychology and get them to emotionally attach and buy the property!
Price the home or condo at its actual value. Go too high and it will sit. Too low and you will most assuredly have left money on the table. Buyers know that they can get a “deal” in 2018, there is literally no stopping their eagerness to claw back more money, if you underprice the property then you are assured to lose more than you could have imagined.
Keep in mind that a negotiation between the buyer and seller is likely for any property that has been sitting on the market. Buyers rarely have the psychological makeup to simply give the seller what they want.
- If the price is at the expected value or slightly over the true value (yes, slightly, not over-priced!) then you can land at a fair sale price.
- If however, you overpriced the property you may not even get an offer. Or if you are lucky, you may get an extremely low ball to counter your ridiculously high price…which can negatively charge a negotiation.
Price Your Home at Market Value – In a more balanced or transitional market this can be effective. People’s expectations are set. Be sure to communicate clearly(to buyer agents and the public) that there is no offer night.
Overpricing a Home or Condo – Just don’t. It’s greedy. Everyone knows. The property will sit for months or years. You will waste your time and everyone else’s. It isn’t a market where you can “fleece” buyers. When you end up getting serious about selling your previous strategy will be seen on MLS there will be negative blowback on your future sale price as your psychological bent will have been noticed and buyer agent’s strategies adjusted accordingly.
Real Estate Pricing Strategy and Psychology is so important. A failed listing strategy will prolong the listing time, increase stress, lower financial returns. Contact me to strategize the right plan for you and your investment!
