I’m going to let you in on a little secret.
There is no magical formula that calculates the exact price your home will sell for.
As REALTORS®, we can generate a ball park number based on recent comparable sales in your neighbourhood. Also, we can use some tricks of the trade and tools to do our best to achieve the best sales number possible for your home, but the truth is, we never know for sure until we’ve exposed your home to the market.
Proper market exposure, and done so in way that best communicates the value of your home, is the best way to achieve top dollar for your home. But what is top dollar?
Of all the lessons I’ve learned in real estate so far, one stands out as the most important. Your home is worth what someone is willing to pay for it. Once again for emphasis…what someone is willing to pay for it.
It’s why we see two identical homes sell on different days for different amounts. It’s why some sellers are able to turn a profit and why others don’t. It’s also the driving force behind why some homes sell quickly and others sit for months.
A home’s value is equal to the amount a buyer is willing to pay. That number is driven by the buyer (not the seller) and affected by the buyer’s exposure to current market supply/demand, the buyer’s motivation or urgency to buy and most of all, perceived value.
Driven by the buyer? Doesn’t the seller set the asking price?
True, but buyers and sellers see asking price differently. Sellers believe asking price is related to the amount they want in exchange for their home. It has emotional ties and can be influenced by their bank account and future plans. Sellers care about how much it cost them to upgrade the flooring to tile when they built the house 10 years ago. Buyers don’t. Sellers care about netting enough out of their sale to cover their car loan and the down payment on their next home. Buyers don’t.
A buyer sees asking price as a benchmark. They compare it to similar homes, calculating the difference in value of features between them and other options they may have. They even consider the length of time your home has been on the market as an indicator of the value other buyers saw in your home and allow it to influence the value they see as well. The price they are willing to pay is more closely related to the value they perceive than the price a seller is asking.
So, if your home is worth what a buyer is willing to pay for it, what’s the point of an asking price?
Glad you asked.
It’s a marketing tool.
Combined with proper market exposure and effective communication of value, asking price is one of many tools used to attract a buyer to purchase your home…for what it’s worth.
And what’s it worth? What someone is willing to pay for it. (aka “top dollar”)
More of our thoughts on Asking Price