Pricing Strategies For Selling Condos in Vancouver
In Episode 3 of How to Sell Your Vancouver Condo, we figured out how much your condo is worth. Now that we know what its worth, let’s discuss how to price the property to reach the goals of the sale.
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List Price as a Marketing Tool?
List Price is a signal or indication of what a Seller will accept for a property.
Price levels can have a huge impact on Buyer Behaviour. An effective pricing strategy is a powerful marketing tool that can allow a Seller to have a huge influence over the negotiations on the sale of the property.
What are The Goals in the Sale?
Most Sellers want to maximize the amount of money they will make from the sale of their condo, but very often this is not the case. In deciding how to price a condo, it is very important for the prospective Seller to think closely about what their goals are in the sale of the property.
- Does the Seller need money from the sale proceeds in 2 weeks or 6 months?
- Does the Seller need to sell at a certain price or does price not matter as much as other goals?
- Does the Seller want to sell it to the right group (ie A family who will live in it rather than an investor) or for the right reason (Someone who may preserve the heritage aspects of the suite)?
What is the Real Estate Market Doing?
Pricing goals and strategies are limited by what the real estate market in Vancouver is doing at the time the property is listed.
Having a realistic understanding of what is happening in the Vancouver Real Estate Market around the intended listing time is essential to effectively implementing a pricing strategy.
The Real Estate Board of Greater Vancouver’s Monthly Stats are a great way to see what the market is doing. Your Realtor will also have a good idea of what’s happening as an active market participant.
Price High, Low, or at Market?
These are the three most commonly used pricing strategies in Vancouver.
1) Price Below Market Value – This strategy usually gets immediate interest on a property and is the quickest way to get an offer.
Pros – If properly implemented (market ready suite, waiting to look at offers, easy access to the property, etc) a Seller can use the negotiating power of a lower price to quickly get their specific needs met (A fast Completion, a specific price, Completion on a specific date, etc) once offers come in.
This can also be a way to create a multiple offer situation for a Seller, which in a rising or hot market may result in offers coming in above the asking price and potentially above market value. In a falling market, a lower than present market price may be the only way to get an offer on a property.
Cons – A lower price on a property not ready for market (Dirty, untidy, in bad repair, difficult access, etc) may not get the Seller the activity they want or give the sellers much influence in negotiations if offers come in.
2) Pricing at Market Value – The most common strategy that may require sellers to wait a short time for an offer in a stable market and less time in a rising market.
Pros – Its safe and simple. In a stable or rising market, it can result in offers that are not very far off the asking price. It gives enough negotiating power to get a Seller most of what they want in most cases.
Cons – In a falling market, pricing at market may result in no offers as Buyers are often concerned that the property will be worth less in the future than it is now and may bring low offers or no offers at all.
3) Pricing Above Market Value – A less common strategy that may require a Seller to wait and often does not result in an offer.
Pros – A very safe way to proceed in a rapidly rising market as it ensures a Seller will not miss out on any future price increases.
Cons – In a stable or falling market, Buyers may ignore the listing assuming the price is not negotiable or may not be aware that the seller is negotiable on price. Buyers, in most cases, are very concerned with overpaying for properties. Sellers expecting to receive an offer above present market value on their property in a falling or stable market may be frustrated as they may receive no offers at all.
Please note, The Seller chooses a price and the pricing strategy, NOT THE REALTOR! A Real Estate Agents job here is to lay out the options and give advice!
If you have any questions on how to sell your condo in Vancouver or on pricing strategies, feel free to call me at 604-763-3136 or Email Me.
Be Sure to Check out Episode 5 where we discuss Preparing Your Condo For Sale!