The following is based on an all-too-common story...
The scenario looks something like this. You meet with a Realtor about your home. With handshakes and greetings wrapped up, the tour starts.
“I love your kitchen. Beautiful cabinets! What company did the work?”
“oh, I can’t remember. I think Joyce has the paperwork downstairs.”
The tour continues upstairs, downstairs, and finishes up in the backyard. The Realtor sounds like she knows what she’s doing. She has plenty of experience and is really tuned into your conversations. Following some handshakes and goodbyes, the follow-up meeting is set for tomorrow at 2:00pm.
The Realtor is back with an impressive report on your home. It’s shiny and well put together, and more importantly, is full of recent and relevant data. While your home is special and shows very nicely, there are many like it in this end of town. As a result, determining market value is a straightforward process.
Home A had a nicer, newly renovated basement, but otherwise was quite similar. It sold for $745,000 in 29 days after one price reduction.
Home B had an original kitchen and baths, and didn’t show as well, but it sold for $686,000 after 13 days on the market.
Home C was fully renovated. It sold for $768,000 after 91 days on the market and 4 price reductions.
There are many other sales to reference but these are the three that show the range of where the recent activity has been. Current conditions seem to indicate a list price range for your home in the $729-739,000 range.
“hmmm…that is definitely less than we expected. I mean, that home up the street is not as good as ours and it’s price at $789,000!”
“Do you mean the home that has been on the market for 102 days and still hasn't sold?”
After much discussion, you insist on listing your home at $799,900. Afterall, you can always come down, but you can’t go up. Right?
And quite often, here is how the next 100 days play out.
Your home goes live on the market at $799,900. It’s kind of exciting. You send it to your friends so they can see the beautiful photos.
“Look. They even took photos from a drone!”
It feels good. The For Sale sign is getting a glance from people strolling by on their morning dog walk. You’re on the market! Six days go by and not a peep. One of the homes in the report that we’re competing against has sold for $737,900. It was quite similar, but that doesn’t matter.
“They gave that place away!”
On day eight you receive a report from your Realtor with some info on online traffic.
“Wow. Almost 2,000 views on Realtor.ca!?”
And yet, no showings booked yet.
*ping*
A showing request! The showing happens and the feedback is in. They loved it but are going to keep looking. (translation, the price was too high, and they have no fear of loss).
Sidebar. Shopping for a home is not a process of selection, but rather a process of elimination. When your price is significantly higher than the competition, your home is easier to eliminate from the list.
We’re now at three weeks on the market. With two showings complete, maybe it’s time to think about doing an open house?
“Sure. Let’s do it…”
Nine groups through. Several neighbours, a few people just starting to think about moving, and others who were in and left before any further awkward conversations were had.
Plenty of positive comments though!
“They really loved the backyard!”
But poof, those people are gone.
It’s now day 40.
Your agent calls. “We really need to get the price closer to the competition. Other homes are selling, and it’s quite likely that we’re helping buyers rationalize prices on those homes.”
After some back-and-forth discussions, you agree to lower the price to $785,000. Oh, and the home that was listed at $789,900 has now expired. The sellers are going to stay put for now.
With a fresh new price and the photos shuffled on Realtor.ca, it’s time for some buyer activity. Let’s do this! Six days later you get an updated report on the online activity. There was a small bump in views online which translated into one viewing.
“They really liked it. It’s one of three that they’re considering.”
Translated: that buyer has no fear of loss. They’ll think about it and get back to us if there is any further interest. Translated further, please leave us alone.
We’re now at two months on the market. The Realtor is doing their best but your frustrated. Throughout the day, your phone is always nearby in the hopes that it pings with another appointment request. The beds are made, the kitchen is spotless and “Ray…you need to cut the grass today!”
Another ten days go by without a peep. Your Realtor had a few people email with questions, but no showings booked.
“Do we do another open house?”
“Sure…it can’t hurt…”
Four people through, not a lot of insight. Well, there’s always next week. Two other homes sold last week in your area. Quiet and somewhat frustrated dinner conversations lead to “do you think we really need to drop our price that much?!”
“Let’s give it a bit more time.”
“Afterall, it only takes one buyer!”
“And besides, Tommy down the street said we should have kept it at $799,900!”
Yikes. It’s day 80. There’s only three weeks left on the listing. Your Realtor is pressing to get the price in line with those recent sales.
“Fine. We’ll do $769,900, but I’m not sure what we’re going to do when the listing is up.”
Hurray! A few more showings are booked.
Feedback is nice and pleasant, but these people just started looking and have a dozen other homes they want to see before deciding. As well, that new listing two streets over at $749,900 is on their list to see.
"Argh. Open house? Sure. We’re heading out of town for the day anyway."
Seven people through. Lots of nice comments about A, B and C.
“We’ll see if I hear back next week from any of them!”
“ok then…thanks.”
We’re a week away from the expiry day of the listing. While you’re out at an open house on Sunday, you get chatting with another Realtor. Not sure what to do, you’ve somehow booked an appointment to talk with them further. Your listing expires today, and it’s time to have a tough conversation with your Realtor.
“We really feel like we need to try someone else. You did what you could, but we’re disappointed.”
The Realtor gets their sign, brochures and lockbox, and with reluctance, is on their way. The new Realtor arrives with their report. In a nutshell, your home was priced too high they say.
“We need to get the price under $750,000. I’d suggest $739,000 – 745,000.”
You’ve had enough. You’re worn down and tired of having this unresolved situation hanging over your heads.
“Fine. We’ll do $745,000 but at that price, there's no room for negotiation!”
With a second wind, fresh photos and a new sign, you are back on the market a week later. And just like that, the showings start to happen. Feedback is positive, and the questions start to change. The buyer agents are asking for info on the age of the furnace and central air. They even want to know your ideal closing date.
Five showings later, things are starting to get serious. Finally, at this new price, buyers are seeing the value and are worried they’ll miss out. Emails, phone calls, and tension is rising as your big day approaches.
An offer! Seven days into the new listing and the day has finally arrived. The house at this point has been on the market for over 100 days. The buyer, sensing there may be a deal, comes in at $720,000.
“But we’ve already come down over $50,000!”
That’s another blog for another day, but long story short, you can’t equate reducing your asking price with negotiating.
After some back and forth, the deal is done, and your home is sold at $738,000.
Rewind the tape...
Think back to the conversation you had with your first agent. After 100+ days on the market, you sold your home right in the range they told you.
“hmmm…maybe she was right afterall…”