We are bordering on a buyer’s market right now. I wouldn’t say we are quite there yet, but with the Sales:Active Listings ratio hovering around 35% for downtown condos, buyers certainly have choices when they go out looking for condos this summer. But I don’t want to talk about buying for a change, I want to talk about selling. Specifically, as a seller in this market, you better be able to defend your asking price.
In a seller’s market, where a monkey could sell a condo, agents and sellers will quite often pull a price out of the air without giving it any thought. In a buyer’s market, it’s back to the fundamentals of marketing: Product, Place, Promotion, and PRICE! Yes, choosing the correct asking price is a very important piece of the marketing mix for selling your property.
If you over-price your property, you are shooting yourself in the foot. You will get less potential buyers through your property, less offers, and potentially no offers at all. Inevitably you will have to reduce your price but by then your listing will be ‘stale’ and most potential buyers will have moved on.
You might think there are no risks associated with under-pricing, but there are. Underpricing a listing in a seller’s market results in multiple offers and potentially an artificially inflated selling price. Underpricing in a buyer’s market when there are less active buyers and more listings means you could end up selling your property for less than it is actually worth, but you would never even know it because there just isn’t the same critical mass of buyers out there.
Bottom line, you (and more importantly your agent) need to be able to defend your asking price when a buyer’s agent comes a calling and says, “How flexible is the seller on the price? It is a buyer’s market after all…”. Questions or comments? Thinking of selling? Contact me.