It’s never been harder to predict the probable selling price of a home in the Saskatoon real estate market. At most points in my career, it’s been reasonably easy to come pretty close with a little prudent research. Now, things seem to be changing so rapidly that it’s hard to answer the question with a great deal of confidence when a seller asks, “What can I get for my house?”
Take comfort in the fact that if a home is properly marketed and given good exposure to home buyers, the price which you ask is almost inconsequential, as long as it’s not too high. What’s most comforting is that if you price your home very attractively, you may, in fact, get far more than you ever expected you might.
A recent experience which I had with one of my clients is a perfect example of how price can impact results. I share it with you with their permission.
Joe and Sally (not their real names) wanted to sell their home. As prudent home sellers, they decided to interview three agents for the job. During my time with them, I stressed the importance of selecting an agent based on services and marketing strategy and I asked them to try to focus on those things in making their selection, and not on the agent’s “price.”
Sometimes, agents will tell a seller almost anything to secure a listing hoping that they may eventually convince the seller to reduce it to a reasonable and marketable price. I refuse to do this. Invariably, it costs the seller something, if not a lower sale price, certainly some lost time and frustration. An agent has a responsibility to provide his or her best advice, even if it’s something the client would rather not hear. At the heart of an agency relationship is the principle, “protect and promote the client’s interests” and that begins with the truth.
The first agent that Joe and Sally interviewed suggested that the home’s value was “somewhere between $155,000 and $165,000.”They were left feeling disappointed as they had hoped they could get more. This agent later revised his suggested list price to $199,900 after researching the market further.
When I met them I explained the complexities of pricing real estate today. I told them that I couldn’t be sure how much we could get, but I proposed a strategy that I thought would deliver a top-dollar sale. I knew full well that the first price proposed was too low. Even the most aggressive buyer is only willing to go so far over list price, and a price that is too low can cause buyers to be suspicious and to wonder what’s wrong with the home. I felt the home could look very attractive at $20,000 above this agent’s high range. I suggested that we price the home at $184,900 and I felt confident that it would attract offers above the list price.
The next agent whom they met with suggested a list price that was somewhere above the $210,000 mark. Joe and Sally even felt that the suggested price was “too high” but like all home sellers, they hoped to maximize their return on resale. For the record, I’m not suggesting that this agent was in any way underhanded in his suggestion. Sometimes, it’s simply an honest overestimation of the market’s potential, something all agents have done, and what I suspect probably happened here. As I said, it is difficult right now to nail that perfect price.
You can probably appreciate that Joe and Sally’s day was getting better with each agent they interviewed. They’d gone from $155,000 to $210,000 plus in just a couple of hours. Confused, they decided to interview a fourth agent the following week. That agent suggested a price of $197,000, making my suggested list price the lowest of the four.
When all was said and done, Joe and Sally decided to list their property with the agent who suggested the highest price. They talked him down a bit and the home went on the market at $209,900.The property was listed for two full weeks and during that time many people came to see it. Their agent diligently worked the listing hosting two open houses. Thirty-eight groups of people attended the first one, but soon traffic began to dwindle to “two or three showings each day.”A couple of people made verbal offers both of which were substantially below list. At one point a decent written offer was accepted but ultimately, the buyer failed to remove conditions and the listing expired without success.
I was surprised but very pleased to hear from Joe. When I got the call he asked, “Would you like to list our house?”
“Yes, I would,” I said and a meeting was scheduled to get the home back on the market.
This time, I proposed a listing price of $189,900.It was two weeks later and things had changed some. Again, I was confident that with such a price I good generate lots of interest and in all likelihood present offers above the list price. It took some trust on their part to approve this number as it was a lower price than the offer they had received, and even though it hadn’t completed, I’m sure that the offer price had become the benchmark by which they would judge any future offer. Further, it was still well below the price which was suggested by all of the other agents they interviewed. They decided to trust me and I listed the home at the proposed price.
I began with the usual process of preparing my marketing materials including feature sheets, virtual tours, and an internet ad. Before I placed the home on the MLS®, I emailed it to over 300 agents and invited them to schedule a showing for this home which would be available the following day.B y the end of the day, I had booked about a dozen showings. The following morning I placed the home on the MLS® and the telephone continued to ring and more showings were scheduled. Over thirty prospective buyers went through the home that day, and by the time I met with Joe and Sally later that evening I had seven offers to show them.
Joe and Sally accepted an offer that evening which significantly exceeded the original asking price of $209,900 (by enough to buy some pretty cool stuff) and the sale has since firmed up.
During the previous listing, the buyers called all the shots. They know that the Saskatoon housing market is hotter than it’s ever been and they were probably suspicious that this home had not sold quickly as most others have. Nobody is excited about paying top dollar for a home that nobody else seems really interested in. A lukewarm buyer can be difficult to deal with. Whatever the case, the price at that time was not causing them to really want this lovely house.
On the other hand, our new price created some excitement. Buyers were nearly tripping over each other during that first day of showings and it was totally obvious to everyone who came by that this home was attracting interest and would likely sell today. Buyers came to the table with their very best offer. In fact, if we had four homes just like it, they all would have sold above the previous list price. That’s right; four of those seven offers were above $209,900.
This is a pricing strategy that I’ve used with great success since this bull market began; generating offers that exceed the asking price by as much as 20%.
When you price your home, you’ll want to take some care that you’re not too low, but be particularly careful that you’re not too high. An attractive price that ensures buyer interest is just as important in a hot market as it is in a balanced one.
I’m always happy to answer your Saskatoon real estate questions.
Royal LePage Vidorra