Effective Home Pricing Strategies: How to Set the Right Price When Relisting Your Home

When a home lingers on the market without selling, the culprit is often the price. However, this doesn’t necessarily mean you must resort to drastic price cuts. Instead, it’s essential to consult with your REALTOR® to evaluate if your home’s price aligns with recent comparable sales in your neighbourhood.

In this blog post, I’ll delve into three different pricing strategies and discuss the pros and cons of each to help you make an informed decision when relisting your home.

1. Pricing Above Market Value

It’s not uncommon for homeowners to price their homes above their true market value, often influenced by their sentimental attachment. While this strategy carries risks, pricing slightly above market value can be beneficial if you have a robust marketing strategy in place. However, without effective marketing, your home may not receive the necessary exposure, which could lead to a lower sale price.

Pros:

• Occasionally, homes priced above market value attract buyers who are not fully aware of current market conditions, such as some foreign buyers, potentially allowing you to secure a higher sale price.
• Setting a higher price might draw bargain hunters who are looking for significant discounts, enabling you to sell the property above its actual value. For example, imagine a home appraised at $3,500,000, listed for $4,600,000, and ultimately selling for $3,800,000—still well above its worth.

Cons:

• High pricing can deter many buyers, causing the property to be overlooked and remain on the market for an extended period, which can negatively impact buyers’ perceptions of the property’s value.

2. Pricing Below Market Value

If you’re looking to generate immediate interest in your property, pricing below market value can be an effective strategy. This approach can create a buzz and potentially initiate a bidding war, pushing the final sale price above your initial expectations.

Pros:

• This approach often leads to a high number of showings and offers, creating a competitive environment that can result in offers exceeding the asking price.

Cons:

• There’s a risk that if you set the price too low, you might only receive offers at or below your intended price. For example, a home worth $650,000, priced at $600,000 in hopes of attracting $700,000, might only fetch offers around $650,000, complicating negotiations and potentially stagnating the sale.

3. Pricing At Market Value

The most straightforward and often recommended strategy is to price the home at market value, or slightly below, based on comparable recent sales in your area.

Pros:

• This method tends to facilitate quick sales and attracts serious buyers, reducing the time and effort spent in negotiations.

Cons:

• In booming markets, pricing at market value may not capture the highest possible price. However, even in these markets, pricing slightly below market value can stimulate competitive offers, potentially leading to a sale well above the asking price.

Consulting with a knowledgeable REALTOR® is crucial to determine the most effective pricing strategy for your property based on current market conditions and the unique attributes of your home.