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Without a doubt — PRICE.

Price is Key. No matter how much advertising is done by a home seller and their agent, a home that's priced too much over current market value is just not going to sell. If it's priced too high you may get viewings by buyers and their agents, but you're attracting buyers that are looking in a particular price range and your home won't compare favourably with the current (and recently sold) competition in that price range. Buyers and their REALTORS® are looking at a number of homes and it becomes very obvious very quickly which homes are overpriced.

 

If the home is priced right, it will receive consideration from all prospective buyers and their REALTORS®. A good REALTOR® will help their prospective buyer understand the value in your home and likewise try to diswade a client from overpaying for an overpriced home (they actually have a legal obligation to do this).

 

A home that is underpriced will possibly end up in competing offers and magically disappear in a blink of an eye with apparently no advertising at all. This is due to the incredible effectiveness of the MLS® System. REALTORS® and their buyers under contract get immediate notification of all homes that meet their search criteria. If the home displays incredible value, then you can be sure that REALTORS® and their clients will be on it like starving lions on a carcass. The problem with this strategy (underpricing) is that without sufficient market exposure can you really say that the home eventually sells for Market Value? It may sell for thousands or tens of thousands of dollars above asking price, but is that all that someone might have paid if it had been effectively exposed to the entire market of buyers?

 

When you pay for the services of a REALTOR®, great or otherwise, you're paying for their expertise in effectively appraising your property for Market Value. Market Value is defined as what a reasonable buyer would pay for the home should it be exposed to the market (i.e. the local MLS® System) for a reasonable amount of time.

 

Be wary of a marketing strategy of pricing too high at first (just in case) and bringing the price down if there is no sale in a few weeks. (This is referred to as the Greater Fool Theory of Pricing). Buyers have a natural tendency to stigmatize homes that have been on the market for more than a few weeks (or the local market normal average). They get a feeling that there must be something wrong with the house if it didn't sell in quick order – afterall, "other buyers have passed this one by, too." The only solution to rectify this strategy may be to do a drastic price cut to regain buyers' attention (by creating an inordinate sense of value).

 

Choose a REALTOR® that you can understand when they present their CMA (Comparative/Competitive Market Analysis). Listen to their advice and work carefully with them in choosing a list price and your battle iin getting your homes sold is more than half won.


Every REALTOR® has access to the same information, so they should all come pretty close to the same "Market Value" but you may be surprised to hear that some with tell you a price that you WANT to hear (versus Market Value) in order to get you to sign a listing agreement with them. There's probably an equal number of REALTORS® that may also try to get you to undervalue your home just so that they can get a quick sale. In both cases, you'll know them because they won't be able to justify their recommended listing price versus the current market value that is told by the recent sales of similar and competitive homes.

 

Don't be fooled by the clowns that talk about how they are so "successful for their clients" in getting homes sold faster or for more money than the real estate board averages. Consider this: An agent who claims they consistently gets their clients selling prices that are 1 or 2 percent higher than the real estate board average. The market average for the Sale Price to List Price Ratio in Calgary is typically about 97.5% so getting a sale price that is 2% higher than "market average" is 99.5% of the asking price. Okay, still with me? Now the questions to ask yourself are, "Who exactly determines the listing price?", AND "Who determines the selling price?" Isn't it the Seller (and the buyer in the case of the selling price) that determines these and NOT the agent? All that the agent is really telling you when they say they get selling prices 1 to 2 percent higher than the board average is that they are more successful in getting their SELLER to price their home low to start with. If the seller wants to list it higher than the agent likes, they'll walk away from taking the listing. The other problem with this often quoted number of "sale price to list price ratio" is that they are talking about the CURRENT list price and not the ORIGINAL list price before price adjustments and relisting expired listings. The same thing goes for bettering the board average on days on the market... it just shows that they will only list homes that the seller agrees to a listing price that eventually causes the home to sell quickly. Getting close to the "board average" number is probably better for the Seller in that they know the home is getting fair exposure and is competitively priced for the market.

 

The other obvious things that are assumed here are that the seller is listing their home on the LOCAL MLS® System, that they are providing reasonable access to view it, and that they are allowing the seller's brokerage to offer a market normal commission to the real estate agent that brings the buyer. There is a small but growing trend for sellers to offer a lower than market normal commission but with mandatory buyer brokerage in Alberta this is an endeavour that actually works against the seller. Based on my experience, if a buyer knows their own agent isn't going to be fully compensated for their work (and therefore the buyer may end up having to supplement the seller's commission offering), then the buyer will steer clear of the home - or significantly underbid on it since the seller doesn't understand well enough that the commissions of both agents are paid out of the proceeds of the sale (which is paid out of the buyer's money through the purchase price).

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Data supplied by CREB®’s MLS ® System. CREB® is the owner of the copyright in its MLS® System. The Listing data is deemed reliable but is not guaranteed accurate by CREB®.
The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.
The trademarks REALTOR®, REALTORS®, and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. Used under license.