Yes, we appear to be heading back “there.” “Where?” you ask…. Well back to the craziness of placing homes on the market at ridiculous low prices and having Buyers bid the prices up. In the past 10 days there have been 50 homes sold in Oshawa. Of those homes sold, 9 were listed under $700,000 as an asking price. (For context this month the average selling price for a home in Oshawa has been $962,000.) These homes were listed low in order to attract bidding. Let’s take a look and see how this strategy worked out for the Sellers.
| Asking price | Selling price | Selling amount over ask |
| $499,000 | $647,500 | $148,500 |
| $499,000 | $703,000 | $203,000 |
| $699,900 | $735,222 | $35,222 |
| $649,000 | $641,500 | ($7,500) |
| $649,000 | $660,000 | $10,000 |
| $649,000 | $752,500 | $102,500 |
| $699,900 | $750,000 | $100,000 |
| $699,900 | $760,000 | $110,000 |
| $699,900 | $695,000 | ($5,000) |
In the above 9 examples, all but two of the properties sold for over asking. For the two homes that sold below asking prices, both were rental properties – one vacant and one a semi-detached home that was rented and being sold with an agent in London Ontario.
When the Seller and agent choose the strategy of offering the home at a low price there are occasions when the offers that are submitted are lower than market value. I recently saw an example of this where the comparables indicated a bungalow was worth in the $940,000 range and an agent placed the home on the market for $729,000. The home sold below $900,000, missing market value by about $60,000. There are times when this strategy costs the Seller, rather than causes the home to sell above market value.
When a Seller I am working with chooses to list low, I find it best to review the market trends and look at what percentage of asking prices homes are selling for on average. In Whitby over the past week the average home sold for 4% over asking. This means if the market value is $1,000,000 the strategy would be to list the home for sale at $960,000 anticipating a sale of 4% over asking settling at 1 million. When a Seller chooses to list dramatically lower, such as $800,000 (in this example) Buyers may feel that the home would be worth in the $832,000, not 1 million. This is the risk by offering a price that is much lower than the trends will support.
Regularly we get calls from agents once they have shown one of our listings asking us what the Sellers expectation are. What they are doing is gathering information on which pricing strategy is being used. If a property is being listed extremely low, it makes sense for the showing agent to determine several things; is their Buyer qualified for the Sellers expected price and is the expected price realistic.
These strategies are part of the reason that Buyers are frustrated with the market today. They see a price and wonder if it is a realistic asking price or a strategy price meant to create a bidding war. The home that sold for the most over asking price in the past 10 days came in at 46% over asking, again showing that some homes sell for dramatically over the trending averages. The end result was that the home sold for $57,000 less than the last detached home sold on the same street.
If you are planning on selling a property in today’s market, it is best to consult with an experienced, local realtor and weigh the pros and cons of the different strategies. In the end most Sellers want the process to be done quickly with a seamless process netting them the highest amount of money.
If you are interested in exploring the different ways of selling, I can be reached at lindsay@buyselllove.ca or 905-743-5555.
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