When it comes to selling your property in Montreal or anywhere in the world, knowing the right price is fundamental.
Selling price too high and you risk being on the market for a long time and getting less than what you would have had if you priced it at fair market value (aka FMV).
Price too low and you’re leaving money on the table. Here’s the summary of three common pricing strategies:
This strategy is the most complex, rewarding and riskiest all at the same time. Just like brain surgery, every single step has to be planned ahead of time and every action has to be executed with the highest precision and perfect timing. A wrong move can kill your transaction or make you get less than the fair market value.
Under the right circumstances, the first purpose of this strategy is to create a bidding war to bring the price as high as possible. The second, less known for, is to reduce the legal risk for the seller and still get top dollar.
The seller that wants to use this strategy must understand the elements below in depth and do a perfect execution to maximize net profit:
Even if all the favorable components to apply this strategy is present, not doing the right Comparative Market Analysis will still kill this strategy. People take too lightly on how important a CMA is. Your success depends on getting this number right.
If you are selling your home in the high season, you don’t have to adjust your target below FMV but if it is in the low season, on average, your target FMV price has to be lowered.
If you are selling in the seller’s market, you don’t have to adjust your target below FMV. At a balanced market, this strategy can still work but make sure you truly understand every aspect of this strategy and execute every step to the T. The risk to make a major mistake in a balanced market increase significantly compared to a seller’s market. For a buyer’s market, I wouldn’t recommend using this strategy period unless you are the Tiger Woods of below fair market value strategist.
To maximize the chance to receive as many offers as possible at the same time, you need to plan every step ahead of time. Here is the step by step of successful planning:
This strategy can be applied to a turnkey property as much as a house that needs renovations. The success of this strategy starts with knowing at what price this property becomes a hot deal!
Like any strategy, this one also comes with a set of risks. Sellers really need to weigh the risks and benefits of going this route with an experienced real estate agent that truly understands the market that you are in and all the intricacies of the strategy.
This strategy has so much more depth to it that I can write a full article just about this subject. To know more, ask for our free step by step PDF.
This is the safest strategy of them all. Listing at the fair market value will sell your property in the average timeframe of the market. Depending on how hot the market/property is, you might or might not have multiple offers. If so, please refer to the strategy above.
If you decide to go with this strategy, please make sure to take the elements below into consideration:
I will never repeat it enough; the CMA is the base of any good strategy. Hire a local home evaluator or a great realtor that is good with numbers. A good realtor will explain in detail how he or she got to the number. Don’t trust anyone if they cannot explain how they got the number. If they are wrong about their forecast, YOU are the one that is paying for their mistake!
Make sure your FMV takes into consideration the seasonality of the real estate cycle.
No matter what is the market condition, you must modify your FMV accordingly.
These days, most of the home buyers shop online. They get an instant notification with any new update. According to realtor.com, over 90% of the serious buyers would have seen your listing instantly. The strategy of waiting forever doesn’t make sense unless you are in a really slow market. So if your property lost a lot of momentum after 2 to 3 weeks, re-assess the situation and it might be time to lower the price.
Also known as a testing market price strategy, this strategy can also be very effective if you know how to use it correctly. In reality, most of the time this strategy is often misused by overly ambitious sellers or realtors that use a “list high” strategy to get the listing.
List high strategy: the realtor relies on the fact that a lot of sellers are overly ambitious with their listing price. Meaning the seller will most likely choose the realtor that will propose the highest listing price. That realtor will tell them the listing price that they want to hear to get the listing.
Once the listing agreement is signed, not too long after, the realtor will start giving pressure to the seller to reduce their price. As an excuse, they will say something like, there are not too many visits, no serious offers or the property has a problem in order to get you to reduce your price.
As I said before, make sure to interview at least 5 realtors before committing to one. If a realtor is proposing a price way higher than the other realtors, you must ask him why? Don’t be shy to call back any of the interviewed realtors to compare. The realtors that can justify any of the comparable listings with facts will usually be the strongest realtor from the bunch!
This strategy can often come with a negative impact on your listing if you are not careful:
There is not one single element that would make your property sell for top dollar as quickly as possible. It’s more like the sum of all actions that makes the transaction a bad, good or excellent one. Selling is easy, selling it right is not that simple!
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