This post is for both Buyers and Sellers, but for different reasons. The Vancouver Real Estate market has been very busy (nuts, if you will) for the past year and a half. Inventory is down, demand is up and prices keep climbing. Surprisingly, even to us Realtors, the market has continued in this way without tapering off, and with the market showing the numbers it did last month (see our East Vancouver Real Estate Update), it doesn’t show any many signs of slowing down in the short term.
One aspect to keep in mind while the market is this hot is Pricing Strategy…
How Pricing Strategy Affects Home Buyers
For all the home buyers out there.. I know you’re thinking that the condo that piques your interest this week will probably sell for way more than it’s list price so it’s not worth it to see. Well that’s often true, but not always! Without the neighbourhood and market knowledge, it’s tough for you in this market to decipher how a unit is priced based on recent sales, the neighbourhood and the building itself.
Some Sellers underprice their property to drive up the traffic, bring in multiple offers and eventually sell the unit for a great number. Other Sellers price their property high because they’re confident they can get that number in this busy market. Finally, some Sellers price their property appropriately compared to recent sales and market indicators.
I can think of a few examples of homes I’ve helped Buyers buy recently that there overpriced to the point where we were the only offer, which greatly increases your negotiation power as a buyer. Given that our website lists every home for sale in East Vancouver, I’ve also had inquiries from Buyers about underpriced listings where I’ve had to break the bad news that it’s underpriced (even under what the Seller paid a few years beforehand) and that it would sell for quite a bit more. Assuming a unit is underpriced, you can use market knowledge to determine where the price should be in order to get a sense of what the Seller is hoping for with it’s final sale price.
At the end of the day, if a unit goes into multiple offers, the final sales price becomes more emotional than logical, so you want an agent on your side who understands the current market, where the market could go, how to negotiate and what needs to be done to submit a good offer.
How Pricing Strategy Affects Home Sellers
For all you Sellers and potential out there.. pricing strategy can be a big factor in how a listing is perceived to the public, and how many people come through open houses and showings, which can eventually affect the number of offers you receive.
Under price your listing, and you risk not getting the number you truly want. If you don’t get that number, you can re-list the property at a higher price, but at that point you’ve lost some marketing steam and can anger Buyers who are likely already frustrated with the market. Over list your property and you can alienate some Buyers who would otherwise be excited and able to afford it. Properly price your property to stimulate get good traffic and good interest. Keep in mind, there are other factors that come into play as well:
- it can be worth it to keep the price just below a “threshold” number (like the ’00k’s, ’25k’s, ’50k’s and ’75k’s) so that it shows up to Buyers who’ve limited their search to a certain amount;
- list at the right time – early in the week, not the week before a long weekend, with all photos and information and ready to start showings!
- stage the property well: painting, cleaning and affordable, minor fixes can go a long way in showcasing the property to potential Buyers. Offer Buyers a fantastic property, and you’ll be rewarded with good offers.
Contact us to talk about what interests you to buy, and what you’re looking to sell. We can walk you through the comparable listings and sales, along with what you need to do to reach your goals.