What Is The Correct Price?

  Following a good start to 2013 in January where unit and dollar sales were up 10% and 14% respectively, unit sales in February declined modestly -1% while February's dollar volume was down 7% from the same month in 2012.  Month-to-date, the March numbers are holding steady to March of 2012 and it would appear we may eclipse last year's results by 3% or 4%.

  I am always reluctant to use the term buyer's or seller's market.  A buyer's market suggests that there is lots of inventory (which there is) and that seller's are deeply discounting their prices to attract a buyer.  The latter is not true in our market.  On the other hand, a seller's market suggests that buyers are paying the going asking price and in fact may be over-paying due to multiple offers on the same listing. Again, this is not happening to any significant degree in our market and there are a number of reasons why.

  The bottom line is one thing and one thing only sells a property and that's having it appropriately priced.  No amount of print or online marketing exposure, virtual tours, open houses or other initiatives will sell a property that is not properly priced.  As I have stated before, characteristics such as location, condition, features and so on are important but they too are ultimately a factor of  price.

So what is the correct price?  Despite a comprehensive comparable market analysis or even a formal house appraisal only a buyer knows and establishes what a property is ultimately worth.  In our market, a list-to-sale price ratio of 95% is commonplace.  Sellers often price their properties high saying "people can make an offer." The bottom line is most buyers will not make an offer on an over-priced property and in fact they may not even find it.  In the Internet age, most property hunters are looking online and in doing so, stick to a price range when executing their searches.  A person looking in the $350,000 to $400,000 range typically does not expand their search to say $410,000 or $420,000 with the assumption they can buy it for less.  For that reason I typically would recommend an asking price of just under $400,000 in order to get the listing in front of those buyers.

  In a market such as the Greater Toronto Area buyers are used to properties selling for close to or even above the asking price. That is just the nature of that market.  My belief is this "conditions" those buyers to the point where they expect they will have to pay close to the full price so why look at properties that may be priced 3% or 5% higher than what they can afford. 

  Buyers from the GTA make up a significant part of the real estate sales activity in the southern Georgian Bay region.  If you have and or are going to list your property for sale think about who the potential buyer(s) may be or where they might be from.  If you want your house or condo etc. to sell, then price it accordingly to where it should be priced.  Example: If the property's market value is $295,000 to $300,000 then price it accordingly in that range.  Not only will you attract a potential buyer sooner but you might get more than one.  That's seems to be the norm in the GTA and there is no reason the same shouldn't apply and or work here.  Pricing too high under the belief "we can always comes down" will only extend the time your property is on the market while raising the question in the buyer's mind as to "what's wrong with this place, why hasn't it sold?"