How I price a home

Pricing is the whole ball game. Get it right and most of the other problems never show up. Get it wrong and no amount of marketing fixes it.

It starts with a CMA

A comparative market analysis. Recently sold properties and what is currently listed. Both matter, but not equally.

What a property is listed for is interesting. What properties are selling for is what counts.

Anyone can ask any number. Sold prices are the market actually deciding something. So the analysis is a mix of what is selling, what is listing, what makes sense as a marketing price, and then the condition of your specific house.

Bracket first, then narrow

I ballpark it into a range before I walk in. Then I see the property and start bringing that range down to a number. Condition, layout, what you have done to it, what the last owner did not do. The walkthrough is what turns a range into a price.

The computer does not have eyes

This is the part most sellers have never had explained, and it changes where the number lands.

People search in brackets. Up to $800,000. Between $900,000 and $1 million. If we list at $801,000, every buyer searching up to $800,000 never sees your house. Not because they would not have liked it. Because a filter removed it for one dollar.

So the number is not only about value. It is about which searches your house appears in, and how many people are in each of those searches.

What happens after we launch

I watch the numbers constantly. Showings booked, online views, how quickly the activity is coming in. The rough measure I use: about twenty showings should produce an offer. If we are well past that with nothing, the market is telling us something.

If showings are not coming at all, that is usually price. Sometimes it is a genuinely unusual property with a small buyer pool, and then the question becomes how many buyers exist for this house at all. Either way, you hear it from me with the data attached.

About two weeks

If a seller wants to start higher than I recommend, that is a conversation, not a fight. Sometimes it is worth testing. What I ask for is agreement on how long we test and what we do when the answer comes back.

Two weeks is usually enough to know.

If you want to list higher than I recommend

I will show you my work. The comparables, what sold, why my number is my number, and what the search brackets do at each price. Then we decide together.

Where I will push back hard is on scale. Thirty thousand over on a $1.2 million property is a test worth running. Two hundred thousand over on a $600,000 property is not a test, it is a few months of your life you do not get back.

Everyone has to agree on the price we list at. If we do not, the listing does not work.

Underpricing to create competition

It can work well and it needs care. Price low enough that buyers see a genuine opportunity, but not so low that the eventual price has to climb an unreasonable distance to get where it should be. In my experience the useful zone is around 8% under where the property should land. On a $1.2 million house that is close to $100,000. On a $600,000 house it is closer to $50,000.

It does not always work. Sometimes there are not enough buyers that week. Sometimes people simply do not want to be in a bidding war. Then we go to plan B, which is listing at what the market will bear and selling it the traditional way.

It is sales. You try things. Some work, some do not, and you adjust.

You will hear from me too much

Feedback after showings. A weekly email with the actual numbers. If your direct competition down the street sold, you will know, and we will talk about why they sold and we did not.

Nothing about your listing should ever be a surprise, because you have been looking at the same information I have the whole way through.

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Written by Mike Elsey, Broker, Royal LePage Real Estate Associates, Brokerage. General information about the process in Ontario, not legal, financial, tax, insurance or inspection advice.