Real Estate Talk:
Pricing strategy for selling
Client question – What strategy is best when pricing for selling?
By Joseph Marovitch
October 6, 2021
This week, I was asked by a client what is the best strategy to sell in today’s market. This is a topic I have written about before. However, in answer to this question, a property, based on its condition, should be placed on a scale at or just below its market value. There are many more buyers than there is property on the market. Therefore, placing a property at or just below market value will cause buyers to notice and pay attention. This strategy will generate more calls, visits, and offers. This has been the trend all over Montreal and has caused numerous multiple offer scenarios and selling prices above asking prices.
Many sellers are hesitant to place their property at or below market and prefer to ask as much as possible. The fact is, if a buyer’s price is above the market comparables, in this market they will get the same price the property would have sold for if it was priced at or below market only in a much longer period.
… placing a property at or just below market value will cause buyers to notice and pay attention. This strategy will generate more calls, visits, and offers.
While the seller is waiting for that one buyer to notice the above-market price of their property, the house is attracting buyers in a higher price category. Those buyers in a higher price category will compare the overpriced property to other listings asking similar amounts for homes that offer more value and be convinced to purchase the house with more value. The rule is, overpriced homes assist in the sale of market-priced homes.
Another issue of pricing property above market is that in the extra time it takes to sell the property, the seller has ongoing carrying costs such as electricity, taxes and maintenance. A further issue is interest rates and inventory. If both rise, the property will be more difficult to sell and may lose its value as more competition enters the market and borrowing costs rise.
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Next article: Market forecast for 2022
State of the market
The Canadian Mortgage & Housing Corporation (CMHC) recently raised its risk assessment from moderate to high for the real estate market. The CMHC is stating that property valuations are falling way below purchase prices. According to the CMHC, sales decreased by 28% in September. The CMHC states this drop is due to low inventory, causing prices to increase more and more. The CMHC fears that a market correction will come into play, and prices will fall when interest rates rise. However, it appears interest rates are not rising very quickly.
As we all know, the municipal evaluation has little to do with the market evaluation. As long as demand accelerates while inventory remains low and interest rates even lower, prices will rise higher and higher. Before the pandemic, prices in Montreal were already rising. Inventory was diminishing due to a lack of space on the island to build, our economy being relatively stable compared to the rest of the world and investing in Quebec was and is a very good bet.
‘The CMHC fears that a market correction will come into play, and prices will fall when interest rates rise. However, it appears interest rates are not rising very quickly.’
Though the CMHC is worried about risk, chances are prices will continue to rise. The pandemic has pushed prices higher much faster, like a sudden thrust to the future. However, Montreal is still running out of space, and developers and buyers are moving to the suburbs, not because of the pandemic, but because the city of Montreal has limits and, as space to build diminished, prices rise. Therefore, the city must expand beyond the river.
Purchasing property on the island is a great prospect for long-term investors, however, there are presently opportunities off-island in areas such as Boisbriand, Boucherville, Brossard, St-Eustache, Blainville and further. These areas are not fully developed and, as the population grows and space in Montreal diminishes, both people and money will flow to these areas.
‘Purchasing property on the island is a great prospect for long-term investors, however, there are presently opportunities off-island in areas such as Boisbriand, Boucherville, Brossard, St-Eustache, Blainville and further.’
For buyers intending to live in Montreal, there are properties for sale but there are more buyers than listings. Therefore, know that in the current market, most property listed at market will sell above market as multiple offers drive prices upward. It may cost more to purchase in Montreal, but values continue to rise. Therefore, the longer a buyer waits to purchase, the more expensive the property will be, both in value and interest payments.
Have a great week!
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Joseph Marovitch has worked in the service industry for over 30 years. His first career was working with families from Westmount and surrounding areas, hosting children between the ages of 6 to 16 as the owner and director of Camp Maromac, a sports and arts sleep away summer camp established in 1968. Using the same strengths caring for the families, such as reliability, integrity, honesty and a deep sense of protecting the interests of those he is responsible for, Joseph applies this to his present real estate broker career. Should you have questions please feel free to contact Joseph Marovitch at 514 825-8771, or email@example.com