Property Selling Tips – Pricing Property
How buyers look at your pricing
Pricing property right when selling is crucial since buyers are simply looking for the best value. Buyers determine value by comparison shopping the features and benefits of your home with homes that are listed on the market and or sold recently.
Most buyers would like to pay you a fair market value for an updated home. When your home or condo is not updated, buyers prefer to pay less, since they end up updating on their own.
Buyers will also not pay you more than the fair market value for an updated property, because this is the least they can expect when buying. When there is a lack of supply of listings, buyers will buy your updated property for more.
Pricing property if it is upgraded
Most buyers are likely to pay you a little more for your upgraded Mississauga property, but may not pay you a lot more if you have over upgraded. Your upgrades are not always the preferred choice of the buyer. For example, your cherry coloured cabinets might be an upgrade for you, but not for a buyer who is hooked onto Espresso coloured cabinets. You might consider a basement apartment as an upgrade, but this will not impress buyers who are looking for a basement with an open concept for their own enjoyment.
So how exactly do buyers shop for value?
Let’s take an example. If you were comparing house A and B to determine which would be a more valuable buy, there would be a couple factors that would be taken into consideration.
Let’s say both houses A and B are priced at a fair market value of $400,000 and all other factors are same. However, house A comes with upgrades (better features and finishes), which house B does not include such as a new bathroom and hardwood flooring in living room (total upgrades valued at $20,000).
Which one would you buy and why?
Obviously, you would buy house A because you would be getting a better value and more for the same price, right?
Now let’s say house B is offered at a price of $350,000 instead of $400,000, now which one would you buy?
A typical buyer would go for Mississauga property listed at $350,000 (house B) because they can easily spend their own money and bring up the value of the house to $400,000. But sometimes, buyers struggling with finances might rather buy house A at $400, 000 so they don’t have to put in their own money to upgrade the house. This is based on the bank’s appraising the property at $400, 000, which might be a challenge in today’s market.
In order increase value, house B has two options:
- Lower the price, or
- Provide even more features and benefits for the same price.
Sellers need to create value in the eyes of the buyers when pricing property.
Tip: There are lenders I can put my clients in touch with who will add cost of upgrades over your mortgage.