June Market Update and Pricing Strategies
This is definitely a hot summer, both weather-wise and market-wise. June was pretty much the same as the last couple of months, only busier! Volume-wise, it was the busiest June in 10 years, with a sales ratio (number of sales per active listings in a given month) at 35%, which is pretty extraordinary.
So if you're a seller, how do you price a property to make the most of this market?
In a strong seller’s market, we tend to see prices all over the place. Sellers may wish to price their properties above market value, since they think, not surprisingly, that they should be able to get that. We also see properties being sold at fair market value, and properties listed slightly below, or even significantly below, market value.
So what do we make of this? Well, I would have to say there is almost never a good reason to overprice a property. It is more likely to be successful in a hot market than in a slow market, but it can also put buyers off, and it usually results in the property sitting longer on the market, thus increasing the likelihood that the seller will eventually have to reduce the price. I’m seeing properties out there, with a market value of approximately $2.5 million, listed at $3.5 or more. And they are just sitting there. So it’s really not a good strategy.
Listing at, or just below market value, is the most reliable way to price – in any market. But in the current environment, it can also make sense to underprice. This generates interest, gets bidding going and can, as we’re seeing, garner a much higher price for the seller than had it been overpriced. But vastly underpricing a property can result in too many possible bidders, with many of them often dropping out at the last minute - ie. within minutes of the seller expecting offers. So determing that optimal competitive price is key.
In this or any market, having a thorough comparative and competitive market analysis done is absolutely essential to understanding how to best position your property. If you have any questions, or would like us to provide you a market analysis, please let us know. As always, there is no cost and no obligation. We are happy to help.
- Maureen and Paul
PS If you would like to receive our monthly stats update and specific information on sales in your area, drop us a line and we'll be sure to send it along next month. We do not sell, give away, or otherwise share your information with any other party for any reason.