Pricing Low and Holding Back Offers
Under-pricing and holding back offers is the only way residential resale single-family homes under $1 Million (and even those over…) are sold in Toronto these days, and it’s been like this for a while now.
Not only that, the “strategy” is effective, and it works. The opposite – pricing at fair market value, believe it or not, does not work, and backfires, as buyers often think, “There’s no offer date? Something must be wrong here.”
Offer dates are not going away, folks. And as for the “pricing games,” you could argue that in today’s market, nobody really knows what a house is truly worth anymore, so under-pricing isn’t going away any time soon either.
Either way, we see this all the time. Every day, I see a property on “New Listings” and I wonder, “Where have I seen that before?” I’ll run a search, and see that I had indeed seen the property up for sale before – last week, for $100,000 less.
In my opinion, coming out at a higher price often sends a signal to the buyer pool that you’re nuts, and to stay away. It might say that you’re unrealistic, or that you think you know best, or that now you’re priced too high.
But on the flip-side, if you really did under-price the property – say for $699,900 when you know it’s worth $770-$780K, and you got two offers, the highest of which was for $740,000, you don’t have to take that offer; nothing is stopping you from rejecting it and re-listing at a higher price tomorrow.
People often get attached to a house emotionally and get fatigued after losing a few bidding wars. If your budget is $700k and your agent suspects a bidding war on various properties in the area, it would be recommended to start looking for homes priced 10% lower than your overall budget of $700k.