There's a ton of inventory sitting on the market right now, and a lot of properties just aren’t moving. Listings that won’t sell are stressful for sellers and agents alike. I've had a number of agents come to me for advice on pricing because they’re facing a situation they’ve never encountered before: we’re now in a buyers’ market, but prices – and seller mindsets – haven't shifted to match.
It’s a stalemate.
“Agents are frustrated with both sides: sellers aren't willing to come down and buyers aren't willing to go up,” says Mary Vittorio, Area Manager at Right At Home Realty. “The only movement is in the pockets where real estate never really slows down. But even there, it’s only the houses that are moving. The resale condo market has taken a huge hit.”
There are a number of reasons for this disconnect. Sellers may have never experienced a buyers’ market and don't understand how it works. Agents who have been in the business for less than ~15 years haven't worked in a buyer's market either, and don't know how to adjust their pricing strategies to match recent trends.
“Another factor is that many sellers aren't actually serious about selling,” says Blair Anderson, VP of Operations and Broker of Record at Property.ca. “They're just testing the market, with the attitude of ‘if I don't get my price I won't sell right now’ driving their decisions.”
READ: Investors, The Condo Market Needs You Right Now: Expert
Without appealing prices, buyers aren’t biting, leaving properties to languish. “Reasonably priced real estate is selling, generally for 95 to 100% of the list price,” says Vittorio. “Unreasonably priced real estate, on the other hand, stays on the market for months.”
So, What Do You Do To Get A Listing “Unstuck”?
- Explore your reasons for selling. How motivated are you? Be honest with yourself and your agent. If you’re just testing the waters and you don’t have to sell, you may want to hold off until fall. But a lot of folks — such as those who bought a new home without selling first, or investors with four pre-construction units about to close — aren’t in a “wait and see” situation. If you need to sell now, it's time to put your pricing strategy under a microscope.
- Review real-time, area-specific data.The market is changing week-to-week, even day-to-day, so it's not enough to look at comparable sales from a month ago. Don't just look at general neighbourhood data: drill down to see what's happening street-to-street. Factor in the property type, too – a house in a high-demand neighbourhood will require a different approach to pricing than a condo. Similarly, a house on a street where five other similar properties are for sale will need a different strategy than an area where yours is the only one.
Before listing a property, ensure you understand what's happening in that specific micro-market. Realtors should be presenting a ton of data to sellers to justify pricing advice.
- Adjust your strategy. Align it with ultra-current buyer activity in your specific neighborhood and property type and reevaluate your price regularly. Monitor market trends and feedback – and keep adjusting until it's sold.
- Use round numbers.“This is the single most effective thing I have done when pricing,” says Anderson. “If the market value is close to a round number like $900, do not price it at $899. A house isn’t a paring knife you’re selling for $19.95. When people search for properties, they use round numbers, searching in ranges like $800-900 or $900-1M. When you price at $899, your listing will show in the $800-900 search, but NOT in the 900-1M. To expose the listing to the most buyers, price it at $900 so it shows up in both searches.”
- Get feedback – and act on it.Ask for comments from buyer agents after showings. Are there common concerns about price? Is there something else keeping buyers from making an offer? If it’s something you can change, change it. Also, take a close look at online traffic to the listing. A lot of views but few inquiries may suggest the price is deterring buyers.
- Consider adding value instead of reducing the price. If you can't (or won’t) go any lower, offer incentives like paying for closing costs or including appliances and furniture. Or, be more flexible on the closing date or contingencies.
- Pay attention to the timeframe. Check the average time properties in your area stay on the market. If yours has been up longer than average, it may indicate your price is too high. Also consider the season: summer is usually slower than spring or fall. “If a home hasn't sold in the desired amount of time, it is likely overpriced by at least 5%,” says Anderson. “Reduce it by at least 5% to have an impact.”
- Maximize your marketing. Work with an agent who is a marketing whiz: one who can share recent successes selling a property like yours. Optimize your home's appeal with upgrades and staging, and don't skimp on the look of your online listing, either. Make sure it has outstanding visuals and an engaging description.
- Consider the bigger financial picture. Calculate the costs (mortgage, utilities, taxes, etc.) of holding on to your property longer. Reducing the price may actually be more cost-effective than waiting for a higher offer. Be honest with your agent about the minimum price you’re willing to accept and go from there.
- Work with a great agent – and trust their advice. While this particular point may fall at the end of this list, it’s actually my first piece of advice to any seller, especially in this market. Get an agent with a great track record and follow their guidance. A tough market is where experienced, market-savvy realtors really shine. And agents: if you can't list something at the right price, don't take the listing.
Ultimately, a lower price will almost always garner more attention. But the answer to “should I reduce my asking price” is really… it depends. It takes a lot of research, knowledge, and trial and error to pinpoint a “sweet spot” price that will appeal to buyers, but still meet seller goals.
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This article was produced in partnership with STOREYS Custom Studio.
