Is it a good idea to list a property at a lower price to create a bidding war?
Tags: bidding war, offer presentation, property selling strategy, listing
Estimate reading time: 2 minutes
Written by Yan Zhou
Why I would list a property at $999k when I know the property would worth around 1.4 million dollars.
I recalled one time I met with a seller for listing presentation. We discussed about the pricing strategy. When I proposed to list at $999k with an offer presentation date. The seller paused for a second and looked at me. Before he asked the question, I know exactly what his concern is about.
As a professional real estate agent, I know the market value is around 1.4 million dollars for that home. The buyers go to realtor.ca and they see the price of $990k and the eye-catching photo & video, all the sudden they think they can afford it and they start calling their buyer agent to arrange for a property showing even though they only have mortgage pre-approval for one million dollars. So why would I still price it at a much lower price? Of course, it is NOT for me to place a “sold over asking 40%” sign on top of my for-sale sign. Yes, it looks nice on me however that is NOT my intention.
For real estate pricing strategy, there are three ways to do it. You can price it higher than the market value, at the market value or below the market value. Today we are going to discuss “price below the market value” only. I will discuss the other two property pricing strategy next time. Timing and economic circumstances are the keys, and we must use the strategy accordingly. In this red-hot real estate market, the way I present it as a seller agent/listing agent, I know if I list it at 1.4 million dollars, I will have less showings. Yes, all these buyers are going to be qualified and be able to afford the 1.4 million dollars price tag. However, less showings will lead to less offers. Probably I will receive four or five offers compared to 20 to 30 offers. More offers will create a hype and buyers will fear to miss out. This will drive the final sales price higher. As said, as a seller’s agent/listing agent, my goal is to help seller to get top dollars for their property and ensure a smooth transaction.
At this point, some people may question, why create all these hassles while seller agrees to sell at 1.4 million dollars. Since January 2021, the greater Toronto area average home price grows dramatically every single month, sometimes you can even see $30k price difference for a similar property on the same street within 2 weeks. If I list the property at 1.4 million dollars and sell it at the asking price immediately. Yes, my seller client will be happy for that. But what if he sees the house next door sold for $1.43 millions dollars next week. So, I will not recommend to list at the market value now since the result may surprise you if I price it lower and have an offer presentation date, especially during this red-hot real estate market now.
If you agree or disagree to what I said above, feel free to comment below. If you have questions about the real estate market, Toronto, Markham, Richmond hill, Vaughan or otherwise (there are some great opportunities in areas you may not notice, please give me a call, I would be happy to help. If you know of someone thinking of buying or selling, please let me know, I will take extra good care of them.
Your friend in real estate,
HomeLife Landmark Realty
February 15th, 2022