Avoid pricing mistakes when selling

Hey there, time traveller!
This article was published 06/10/2015 (3836 days ago), so information in it may no longer be current.

When it comes to selling your home, your asking price can make all the difference.

A good place to start is with a comparative market analysis, which can suggest a price range based on an analysis of the characteristics of your property measured against similar properties that have recently sold. This is a useful reference when discussing pricing with potential buyers. It will help you price your home according to its condition, size and neighbourhood.

Here are five common pricing mistakes and how to avoid them:

Basing your price on another home’s asking price

Basing your home’s asking price on what the neighbour around the corner is asking can be a big mistake.

Homeowners can ask for whatever amount they want, so your neighbour might be asking for $20,000 more than they should. Basing your price on that amount will decrease your chances of selling.
Instead, you should base your asking price on recently sold homes of a similar style and size.

Basing your price on recent renovations

If you bought your home two years ago and installed a new kitchen worth $50,000 it doesn’t necessarily mean that you can increase your asking price by $75,000. Renovations do not automatically give you a 100 per cent return on investment when you sell, especially if the renovation was specific to your taste.

If you are expecting to sell, be sure to do renovations that focus on improving the function of the home and keep the style neutral to increase its appeal for future buyers.

Basing your price on how much money you need

This is a very common mistake made by home sellers. Many sellers have already bought a new home and think ‘I need to sell my home for $X in order to pay for my new home.’ Or perhaps a seller might not have a lot of equity in their home and thinks ‘I need to sell for $X in order to make a profit on my home’.

Buyers are not concerned with sellers’ personal situations. Buyers focus on purchasing at a fair price, based on what other homes have sold for in the neighbourhood.

Basing your price on a different type of home or a home in a different location

Compare apples with apples. Don’t compare your one-storey home to the two-storey property around the corner.

The same goes for the neighbourhood that you live in.  Don’t try to compare your detached home with a detached home in a different neighbourhood.

Starting with a “Let’s try this” price

The most common mistake made by homeowners is starting at a higher price, simply to see what happens. Saying ‘let’s ask for $25,000 more and see if any offers come our way’ can be a big mistake.

By overpricing your home at the start of your sale, you will eliminate many potential buyers who consider your price to be out of their budget. This group will move on to other homes without even considering yours (and one of them may be the buyer who falls in love with your home and would be willing to offer a little more to make sure they get it).

When you know the value of your home and how much money it should realistically sell for, price it close to that price and expect to sell it for that amount. That will encourage the largest number of bidders and give you the greatest chance of success and profit.

Kim Ewchuk is a licensed sales representative and the general manager for ComFree Commonsense Network broker. Suggest column ideas by email at kim.ewchuk@comfree.com