3 principles to know when setting your asking price
Published on September 11, 2019
It can’t be said often enough: setting a good asking price is the key to success when selling real estate. The price must be justified and competitive to get the most from your property sale. And it’s really not that complicated to sort out.
Here are the steps to follow and a few principles to make things clearer.
Estimate the fair market value
The first step is to estimate your property’s market value. To do this, you should analyze similar properties that have recently sold in your area.
“We first create an overview of your property by listing all its characteristics (year of construction, number of storeys, amount of usable living space, land area, etc.),” explains Marc-Antoine Tardif, a certified appraiser at DuProprio. “Then we check the price for which similar homes in the same neighbourhood have sold. This gives us an idea of the amount that buyers are prepared to pay for that type of property in that area.”
Principle 1: Estimating the fair market value is a critical step. Be sure to get guidance from an appraiser. Appraisers are impartial, certified professionals who have no stake in the transaction.
Set your negotiation margin
After comparing your property to the competition, you have to set a margin of negotiation and then determine the asking price. Keep in mind that a price set close to the market value will attract buyers more easily. Let’s not forget that buyers want the most for their money. For equivalent products, buyers will naturally choose the least expensive option.
“We usually advise our clients to keep a margin of negotiation of about 2% from the market value,” recommends Martin Desfossés, real estate coach at DuProprio.
Principle 2: While it’s standard to keep some room for negotiation, it’s better to keep it small and to keep the price realistic.
Be objective and flexible
Lastly, be sure to stay emotionally detached when talking with the buyer. And base your arguments on facts. In this regard, the documents given to you by the appraisers are excellent references to help you when negotiating.
Don’t forget to ask yourself this question: is it more important to sell quickly or to get the best possible price? This will help you determine whether you want to market your property aggressively or at a more moderate pace. And remember that a property’s value is strongly influenced by fluctuations in the market. You may have to adjust your price along the way.
Principle 3: The goal is to reach an agreement with the buyer. So, be firm but not unyielding, and respect the range you set for yourself.