Let me start with the definition of “Market Value”.

“The approximate price a knowledgeable, willing, and unpressured buyer would pay to a knowledgeable, willing, and unpressured seller.”

Basically, this means your house is only worth what a buyer is willing to pay you for it. So, how do we establish an appropriate price that a buyer would be willing to pay? Most sellers will check the local MLS® listings, and see how their home compares to currently listed homes. While this is a good starting point, and will give you a good idea of your competition, it can also be a bit misleading. The reason it can be misleading, is because a seller can “ask” as much as they want for their house. This doesn’t mean anyone is going to pay it!

The most important factor when selling your home is not what homes are listed for, but rather what similar homes have recently sold for. This is the statistic that will properly tell you what buyers are willing to pay for a similar home, in a similar neighbourhood. To find out what similar homes have sold for in your neighbourhood, contact a local Realtor® in your area.

So, why is pricing appropriately so important? The most common statement I hear when listing a home, is “let’s list it a little higher…that way we have room to negotiate.”

While this seems like a good idea in theory, there are a few problems with this strategy. Depending on your price point, asking that extra $5,000-$10,000 may put you out of some potential buyer’s price range, thus eliminating them from the picture all together. Also, an over priced home will help sell the home down the street that is priced correctly. Also, in my experience, when a buyer realizes a home is over priced, they tend to want to offer less than they normally would to compensate (or in some cases out of spite) for the high price.

Another factor to consider is that over priced homes tend to sit on the market longer. After a listing becomes “stale”, it usually encourages “lowball” offers. The reasoning being that the seller must be getting desperate for an offer.

When you take these factors into consideration, it’s not hard to see why competitively priced homes sell quicker, and often for more money than their over priced counter parts. For more information on selling your home, contact your area Realtor®.