Home Listing Price in a Changing Real Estate Market

Changing real estate markets are difficult when it comes to a generating a home listing price correctly and evaluating the current market value for both home buyers and home sellers. When the real estate market begins to shift, especially in Ontario which has been predominately a seller’s market over the past five to six years, It takes time for home buyers to adjust. In the middle of this shift, I often state to my clients in London, Ontario, it’s a race to the bottom, at least with pricing the seller’s home on the open market.

In a seller’s market pricing the homes at market value otherwise known as the expected sale price, means you’re actually doing the listing a disservice. Reality is that in a Seller’s market, as a Seller’s Realtor, you don’t know where the highest price will end up, you can only predict based on the recent sales. With records being broken on a daily basis, this number could significantly pass the recent sales and comparable listings based on the marketing efforts. Thus, pricing a home at the market value, means you’re setting yourself up for only receiving the listing price.

On the other hand, in a seller’s market, there is such thing as too low for a home listing price. There have been many scenarios where listing agents have tried listing homes for $1.00 and as expected, it fails. This is because listing searches don’t pick up the home on internet searches. While this may have worked when homes were significantly less in value, now, home buyers often set a minimum price as well as a maximum price to rule out the homes they don’t have interest in. With a lack of comparable sales, listing for $1.00 will create an absolute unknown for home buyers looking to place an offer and be competitive.

With a history of listing below market value, Realtors will quite often recommend a price below market value for your home, however, still within reason of what would logically make sense to the average home buyer. Often this number is based on what the average home is selling for above the listing price. In a changing market, the strategy of listing what the one home down the street listed for a month ago, won’t make sense anymore.

Now, it becomes a race to the bottom for home pricing. The listing with the highest end finishes, most to offer, for the lowest price amongst competitors will be the one that draws the attention and captures the buyers. Unfortunately, if you’re not the lowest and have attempted this strategy, you’ll quickly find yourself in a tough situation. In the next couple of months, you’ll begin to see many homes re-listing for higher prices after having been listed for significantly lower. 

Overall, don’t be surprised by this strategy, the meaning of a home listing price has dramatically changed in the days of online searches. It’s all about consumer attention. The home listing price is simply a marketing price.

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Posted on March 27, 2022

Post Categories Home Sellers | Home Buyers

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