Price It Right

by Darrin DeRoches January 12 - 18, 2012

I spoke with an agent last night about a new listing he was pursuing and the discussion led itself to pricing. Ironically I had just completed an update course on the very subject so it was interesting to get a colleague’s take on properly pricing a property. How do you come up with the right price?     The standard way of pricing a property is to look at the “comparables.’ If you are selling a two–bedroom condo in a certain building then the last two–bedroom condo in the same building sold would be the best comparable. It makes it pretty easy to come up with a fair market price when you have a near exact match to compare it to. The problem arises when the owner of a condo ‘believes’ his condo is worth more due to upgrades, view, and which floor it is on. Some people believe their property is worth more than the comparable no matter what an agent says. How much is an upgrade, view and floor really worth?     The agent I was speaking to brought all the comparables to assess the property and when he went into the home he was surprised at how bad of shape it was in. He showed the family that comparable properties sold for around $190,000 and he was going to suggest that price range, but when he saw the stains in the carpet and appliances falling apart, it wasn’t pretty. So when he started to make his case that work had to be done and money would have to spent on staging etc., the family started to balk. He realized that he was losing them in the discussion of price so he went up to $189,000 in price where he really believed it should be at $179,000. The family had something else in mind. They want to list at $219,000. Big difference.     So what to do in this situation? Most agents  would try to talk them down to a closer price to their assessment and see if there is any movement. When asked why they think their property is worth $30,000 higher than his assement their response was “we need to get at least $210,000 out of the property!” Big red flag. Once a seller uses the words “ we need to get,” a seasoned agent knows they are in financial trouble or have mortgaged the property to the hilt and need a high price to be able to move forward. The majority of agents would probably list the property for the $219,000 and hope for the best. This agent explained that the family will have to invest money to improve the property so he would list it at the $190,000 ballpark. If they do not decide to do so then he will not invest his money and time to list a property that is overpriced and in bad shape. If it is not priced right, you are just wasting your time and energy. Listen to your agent and if he is not willing to list it, something must be very wrong with your property. If the next agent you call is willing to list it at an inflated price, they are desperate for a listing and you in for a ton of disappointment. V [DARRIN DEROCHES]     Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at mail@uniquerealty.ca.