Are you pricing at fair market value and accepting offers any time?  Or are you under-pricing and hoping for multiple offers?

BOTH?  Really?  Well that’s new…

A few weeks ago, I wrote about a house that was listed at $499,900, where I knew even in advance of the offer night that the sellers and their agent were likely going to take the property off the market and re-list it higher after a failed attempt at obtaining a jackpot on “offer night.”

Sometimes, you just have a “feeling” about these things.

Based on the agent telling everybody who came into the open house, “The property next door sold for $600,000,” and his, um, “help” with providing comparable properties for my clients and I to strategize, I figured that they were holding out for a price they’d never get.

Indeed, they rejected all four offers on offer night, and re-listed at $599,000 the next day.

Then to our collective amazement, they raised their price again a week later to $609,900.

The first price increase made sense, in that “I know how you’re going to hang yourself” kind of way.  But the second price increase was just stupid.  For a paltry $10K, now any buyer between the $500,000 – $600,000 price range isn’t going to see the listing on MLS.  The house is now over-priced by at least $40K, and it’s in a completely different price range than where buyers for a property like this would be looking.  It’s like listing a Markham property with downtown Toronto coordinates, and then wondering why you’re not getting any showings…

The saying, “You only get one chance to make a first impression” has a place in real estate, and I tell this to my seller-clients all the time.

In my mind, there are weeks worth of work to be completed before putting the property up for sale.  You complete all the necessary tasks, put the property on the open market, and whether you have a “hold-back” on offers, or whether offers are any time, you know that you’ve done everything you can to market the house for the highest dollar possible, and that your best price will be attained within 1 to 8 days on the market, depending on strategy.

You get one chance to make an impression on the market, and the buyer pool.

However, many sellers don’t understand this, and they play games.

A client of mine asked me about a house in East York that is currently listed for $629,000, but the history shows that this property has been for sale, essentially since last fall.  The property was listed for $569,000 in September, with a hold-back on offers, and then eight days later, the listing was terminated, and the property was re-listed for $629,000.  We all know what happened here, right?  The sellers expected a jackpot on offer night, they didn’t get it, so they re-listed.

The property sat on the market for two months at $629,000, and was then re-listed with another agent at $579,000, again with a hold-back on offers.  And again, the listing was terminated, and brought out at $629,000.

You can’t fool the market, and you clearly can’t fool the buyer pool.

These sellers had one chance to make a good first impression, and sell their home for the highest dollar possible, and they refused to accept current market conditions.  In the end, it’s going to cost them.

The house was recently re-listed with a top agent in the area, although this is now the 5th listing, and third agent.  The price is $629,000, and the house has been on the market for almost one month.

It’s clear that the buyer pool doesn’t want to go near this thing.

It doesn’t take much for the buyer pool to conclude “Something is wrong there,” and turn their backs on a property.

Most real estate is sold via the same methods, so when something exceptionally abnormal happens, ie. a house being listed five times, over six months, at a slew of different prices, the buyer pool sours on the property.

The sellers would undoubtedly cry foul, play victim, and tell anybody who would listen that it’s a “tough” real estate market, but in reality, they alienated themselves, and stigmatized their own property.

As a seller, you have to pick a strategy from the onset, and stick to it.

If you’re going to under-list your property and attempt to get multiple offers, you’d better be damn-well sure that you’re going to get them!

I had a listing earlier this year for a very unique property which belonged to a high-end interior designer.

The design was very different, but the house was in a neighbourhood where “different” wasn’t really a good thing.  Like it or not, the neighbourhood is extremely homogenous, and the buyer pool expects to see the same thing over, and over, and over.

The same lemons and limes that the stager left behind, the same color stain on the hardwood floor, the same layout in new-builds for the living/dining/family/kitchen, and the same “neutral, earth tone” paint colors.

My clients’ house was spectacular, but only a small portion of the buyer pool would appreciate it.

So we listed the property for slightly above fair market value, advertised “offers any time,” and sold the property on the second day of the listing for the full asking price.

We spent four full weeks getting the property for sale, and sold it after two days.

That is the way you sell real estate in Toronto, for top dollar.

A different house, and you would have a “hold back” on offers and sell it on the seventh day of the listing in multiple offers, but you get the idea.

You have to pick a pricing strategy well in advance of the listing, and in Toronto, that either means you under-price and hold-back offers, or you list slightly above fair market value and take offers any time.

It’s all, or nothing.

Black or white.

I don’t know of another way to price a property in this market, but these strategies come with the assumption that ALL the work has been done well in advance of the listing.  No property is ready to list the day you meet the sellers for the first time.  It could take weeks to get the property touched-up, painted, cleaned, and staged, and it takes me at least two weeks to get my virtual tour, video, photos, floor plans, and other marketing ready.  But this leads me to the second point about strategy: many sellers list when the house isn’t ready.

Think about houses or condos you’ve seen in the past that were a complete mess.

I went into a house the other day that looked like something out of Hoarders.  If you found one lobster trap in the living room, guaranteed there was a second and a third!  These people had five of EVERYTHING!  And how much is this going to impact the sale price of their home?  They should have emptied the entire property, moved into a rental (or even a hotel!), and got an extra 15% for the property.

Or how about those new-builds that are about 96% completed?  There’s no appliances in the kitchen, the basement bathroom is half-tiled, there are no shelves in any of the closets, and the garage is full of construction debris.  Oh – and there’s a “hold-back” on offers, because the sellers think they’re getting top dollar.

Come on.

If you’ve listed your house for sale four times, with three different agents, at four different prices (eight if you include price increases and decreases), over six months, you’re holding up a flag that says, “I’m completely nuts, and this is going to be the worst real estate experience of your life.”

I’m not saying that if everybody jumps off a bridge, it makes it alright.  But I’m saying that if 95% of properties in Toronto are sold via extremely similar methods, then the seller who goes from $499,000 to $599,000 to $609,000 to $479,000 to $599,000 is wasting his time.

You just don’t get a second chance to list your property, fresh and clean, with no history, for the very first time.

You have to pick a strategy, and stick to it.

And if you list your house for $499,000, “hoping” for $600,000, but the highest offer you get on offer-night is $555,000, well guess what?  That’s probably the best price you’ll end up with.  Sure, you can spend the next five months trying at $609,000, and maybe head back to the well for another try at $499,000 with a hold-back on offers, but buyers won’t play ball.  They know you already tried the multiple-offer game at $499,000 once before!  Why would they get involved?

In real estate, there’s often a very subtle difference between “ingenuity” and “stupidity,” but this kind of seller will always fail to see the difference…