Myth #1: Pricing High Will Result in a Higher Price
Sorry folks, but this strategy rarely works in Toronto’s current real estate market. Here’s Why:
- Buyers comparison shop. They aren’t just looking at your home; they’re looking at other properties for sale right now and properties that have already sold. If your condo is priced $40K more than a comparable unit, many Buyers won’t even bother scheduling a showing; they’ll just focus on the other units for sale.
- Toronto Buyers don’t like to negotiate. Maybe it’s the result of years of bidding wars or agents without negotiating skills, or maybe it’s that nicey-nicey Canadian thing, but most Buyers will choose to walk away from a house rather than negotiate it. So to all the Sellers who tell me ‘If we price at $1,250,000 and the house is only worth $1.2 like you think it is, surely a Buyer will make us an offer for $1.2.”. Not necessarily. We see it all the time with our Buyers.
- Listings get stale. Unlike wine that gets better with age, a house for sale is like a chocolate croissant – best when it’s fresh and new. When a home has been on the market longer than average, people start to get suspicious. (In Toronto, ‘longer than normal’ can be anywhere from 10 days to 30 days depending on the type of home and neighbourhood.) When Buyers see a listing that’s been hanging around for a while, they start to wonder: What’s wrong with this house? Why hasn’t it sold? What is everybody else seeing that I’m not? And then they decide: this Seller must be desperate. Enter the low-ballers and bottom feeders (best avoided at all costs).
Studies show that the longer a house sits on the market, the lower the price will be. So while a house might have been worth $900,000 on the day it was listed for $975,000, by the time it sells, it may only fetch a price of $870K.
Pro Tip: When your property first hits the market, you have a unique opportunity to make a great first impression. Don’t blow it.
[Related: The Market is Smarter Than You]
Myth #2: That agent said I can get $XX for my house.
If only selling real estate was that easy!
When a Seller decides to list their home for sale, they often interview multiple agents. While we applaud that strategy, it’s important to beware a commonly used sales pitch strategy. I call it the “Estimate an Impossibly High Value to Get the Listing” strategy and it goes something like this:
A Seller interviews three agents:
- Agent #1 estimates a condo to be worth $425,00
- Agent #2 estimates the condo be worth $420,000-$435,000
- Agent #3 estimates the condo to be worth $470,000
Agent #3 gets hired because they obviously see more value in the property than the others and the Seller would like an extra $50K.
How does the story end? The property sits on the market for 70 days. The price gets reduced to $450K. Than $430K. And finally, sells at $410.
Yes, that was a true story. And we see it happen all the time.
Truth #1: Your agent doesn’t decide how much your home is worth, the Buyers do. Anyone who tells you they can guarantee a price for your home is lying.
Truth #2: If you want to get top dollar for your home, you need to hire the agent who is investing in photography, staging, and marketing, not the one who guesses the highest number.
Pro Tip: Ask the agents you’re interviewing to give you a realistic idea about the value of your home. Don’t hire an agent based on who gives you the highest number.
Myth #3: The agent knocking on your door has a real Buyer for your house.
Ugh, this is my least favourite one. It works something like this:
An agent you don’t know calls or knocks on your door and tells you they have a Buyer for your home. Truth? 98% of the time that’s a lie. It’s actually a slimy tactic that’s taught in many real estate courses and is a way to encourage potential Sellers to sell. It usually has nothing to do with helping a Buyer and everything to do with the agent wanting to list your house for sale.
Pro tip: Ask for proof of a real Buyer before you let them into your home. Ask them what they are looking for, what their budget is, where they currently live and when they want to move. Most agents won’t be able to BS their way to the answers on those questions.
Better yet? Tell them to call your agent as they would be handling your sale if you decided to list. Every time our clients have done that, the agent never called. Shocker. I guess there wasn’t really a ready buying waiting outside with buckets of cash?
[Related: Should I list my house exclusively?]
Myth #4: It doesn’t matter who you hire, the house will sell itself.
In a market as hot as Toronto’s, it’s easy to believe that any house will sell.Truth: it probably will. The bigger question is….will it sell for the highest possible price?
Every house in any market will sell within a certain price range…where it sells in that range depends on:
- How buyers perceive the value of the home (affected by house preparation, staging and pricing strategy);
- How many people see the house (dependent on the marketing reach)
- Whether or not the buyers connect with the house (heavily influenced by photography, staging, and the marketing copy). Buyers who fall in love pay more; that’s just a fact.
I always get really suspicious when potential Sellers seem more concerned with the commission percentage than with how much money they’ll walk away with. Would I pay an extra $5,000 to make an extra $20,000? Of course, I would!
Myth #5: You get what you pay for.
Oh, how I wish this were true! Sure, we’ve all seen discount brokerages offering discount services with mediocre results. And yet there are plenty of “full service” real estate agents out there who aren’t really “full service” at all – they’re just “full commission.” When you hire a real estate agent to sell your home, do your due diligence. Ask lots of questions. Read reviews. Ask for references.
Myth #6: My agent is going to bring me a Buyer and give me a discount.
Ugh. I hate this tactic. It’s pure BS. Here’s why:
- Statistically, it’s extremely rare that an agent will find a buyer for their own listing. They’re likely just dangling a carrot, so it seems like they’re giving you a deal, when they know realistically that the chances of that happening are slim to none. Make sure to ask: What specifically will you be doing to find me a buyer? What percentage of your listings sell to your own Buyers? What will happen if you bring me an offer and represent both the Buyer and the Seller?
- You don’t really want your agent also representing the Seller. It basically means they aren’t representing either of you and gets messy [Read: Should You Buy with the Listing Agent?]
- Think about it: if I an agent is working with a Buyer and stands to make X commission if they sell them a stranger’s house, why would they want to make less money if they sell them yours? This just goes against basic human motivation. It doesn’t strike me as a particular savvy strategy to de-motivate somebody from bringing an offer on your home.
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