What Is An Exclusive Listing?
A tough cookie! There isn’t a one-size-fits-all answer when it comes to home pricing strategies! There are so many variables to consider when pricing a home to sell in a market like Toronto’s. And with that comes various marketing and pricing strategies.
Market conditions influence pricing, the availability of inventory, time of year, neighbourhood comparables, buyer activity, upside potential, downside potential and the list goes on!
With that being said, there are generally three approaches most commonly practiced in Central and; Downtown Toronto.
To simplify, we’ve outlined these three different home pricing strategies and their expected outcomes. We’ve also identified what happens if one of these approaches doesn’t seal the deal! What happens next? What are the pros, and what are the cons?
It’s typical for Realtors in Toronto to list a property on MLS for far less than its market value. In this case, the listing price is merely a marketing number and has little to do with the expected outcome. Think of it as clickbait per se!
The Selling agent is working hard to ensure as many possible purchasers view the property as possible (well, they should be working hard). The more eyeballs on the property, the more showings booked. The more traffic at the home or condo, the better – as showings lead to written offers. Ultimately, the more offers received, the higher the property will sell for on the offer date (if all goes as planned). Essentially, the listing agent and the sellers are marketing the property in hopes of eliciting a bidding war to drive the sale price up.
Often, a Toronto property is marketed for $200K- $400K under its expected sale price.
This strategy can frustrate buyers and their agents alike, but if you want to score a property in this town, you will have to learn to play the game (it’s a popular one).
1/ The Seller is holding a blind auction by using this strategy. Essentially, they allow the market to dictate the value of the home or condo by having their cards close to their chest.
2/ By hosting an offer date, the Seller can drive the price up if they manage to elicit more than one offer. When buyers are in competition and are emotionally attached to the outcome, it’s not uncommon to see prices topped up. FOMO is a real thing. In fact, the Seller will often receive wildly higher offers than they ever expected.
3/ By using this pricing method, the Seller has the opportunity to see what the highest possible sale price for the property may be. There is no money left on the table. And, often, a bidding war can lead to an unexpected, record-smashing sold price that far exceeds everyone’s expectations (including the Seller’s agent). If the market ultimately dictates the value of your home, who’s to stop you from seeing what the market is willing to bear?
1/ What happens if you opt in to this pricing strategy and it doesn’t work? You don’t receive multiple offers on your offer date. Or even worse? Not one offer at all. And, trust us, it’s happened to the best of agents and their selling clients. And it isn’t fun.
If this is the case, what’s the best course of action?
You have likely received feedback from agents and their clients throughout your marketing period.
Any roadblocks, challenges or hiccups you could overcome?
Did you receive feedback about price and value? If so, LISTEN. Adjust. Re-strategize.
If this is the predicament you’re in, know there is always a solution. Hope is not lost.
2/ If your home does not sell on offer night, we would recommend terminating the listing the very next day and re-listing the property closer to its market value or even slightly higher. The new price should be determined using your agent’s Competitive Pricing Analysis and the feedback you have received from buyer’s agents throughout the marketing period.
This way, you’re now telling the buyer pool what you believe the property is worth and that you’re open for business and prepared to negotiate.
Often, when the property is re-listed (and, likely for a higher price than it was initially), the home or condo will sell within 1-2 days, assuming there is nothing gregarious about the home’s price or overall condition.
So, if you opt for Pricing Strategy #1 and you don’t receive the price or the number of total offers expected, you move to Plan B. Dust yourself off and try again.
A second approach practiced in Toronto is a bit more pragmatic. However, your listing agent needs to be astute with their pricing and market valuation. You don’t want to miss the mark on the first go and be forced into multiple price reductions or “on and off the market” temperature checks.
1/ You’re not playing games. You’re simply telling buyer prospects what you feel your home or condo is worth and what your expectations are in terms of price.
2/ This method is more civil and well respected by the Toronto buyer audience who wants to avoid bidding wars’ emotional ups and downs. Many buyers refuse to get caught up in a multiple offer scenario.
3/ You will often be able to negotiate with the buyer’s agent one-on-one and hash out a deal structure that works for all parties addressing the price, closing date, deposit amount, conditions and other terms.
4/ This approach works well for unique properties that may not have high demand. For example, the buyer pool is smaller for luxury properties listed above $2.5M. Or when market conditions are slightly softer and properties are not flying off the shelves as we often see.
1/ You may be leaving money on the table – especially if you own a property that’s in high demand at an entry-level price point. This scenario is particularly true for freeholds in desirable neighbourhoods.
2/ If you don’t nail your pricing from the get-go, you may end with less than optimal interest. Slow on showings–little buzz. No offers. This method may force a price reduction or a re-list that stigmatizes the property over time.
3/ If you’re going to go with Pricing Method 2, know there may be some speed bumps along the way if your price isn’t jiving with market conditions from the get-go!
This pricing has become more common over the last couple of years. Essentially, you’ve opted for a reasonable listing price, but there may be a higher sales outcome based on buyer demand. However, you’re simultaneously trying to avoid shooting yourself in the foot. So you want your cake and to eat it too!
By using this method, you’re hoping to receive offers with an extended deadline to respond (24-48 hours). By making this request, your Listing Agent has time on their side to try to elicit more than one offer. In other words, they are hoping to initiate a bidding war!
1/ This softer approach tends to be a good hybrid between Pricing Method 1 &; 2. The Seller is looking to obtain the highest and best price but doesn’t want to subject themselves to the stress of the offer date. It’s agreed that this particular property may not fly off the shelves, but it also has the potential to receive a lot of interest depending on market conditions and inventory.
2/ This pricing may be a helpful strategy when multiple decision-makers (an Estate Sale is a good example) or international clients need time on their side during the negotiation process.
1/ The buyer’s agent is not “forced” to adhere to the 24-48 irrevocable deadline. The buyer agent has every right to submit their offer with an aggressive two or 3-hour deadline to respond. If this is the case, it doesn’t permit the Selling agent enough time to drum up additional offers.
2/ Or, the agent representing the buyer does submit their offer with a 24-48 hour irrevocable. However, the Selling agent can still not elicit more than one offer.
3/ If this is the case, you’re in a bit of a predicament because it’s unreasonable to expect more than your listing price – but, at the time, you were secretly hoping to see more interest and some competition for your property. And, scoring a mediocre price in one of the best real estate markets in the world isn’t exactly the dream scenario. It can get messy unless expectations are clear from the first day on the market! A clear path and an understanding of the nuances of this strategy are paramount to winning using this pricing practice.
There are variations to this theme and various ways for the market to respond; your goal as the Seller is to elicit the highest and best price in the shortest time. With that being said, you need to answer the following four questions to navigate the sale of your property and your home pricing strategy:
1/ What is the property worth on paper based on comparables, price per square foot and neighbourhood trends?
2/ What has been the most successful home pricing strategies in my neighbourhood or building, and is it strategic to replicate something similar and why?
3/ What is your risk tolerance? Do you have the disposition to accept offers at a given date and time? Or, are you more of a straight shooter and would like to negotiate old-school style?
4/ What are you willing to do to sell your property at the highest and best price? This preparatory work includes many factors, including Staging, Styling, Landscaping, Decluttering, Painting, Negotiating with Tenants, Moving, Packing, Storing – and the list goes on! Often it’s the little things that score you a considerable number!
If there’s one thing we can say from experience, it takes hard work to sell your home. But, hard work pays dividends. You get the results you want when you have the right partner in your corner. When you sell your home with Fox Marin, we are that someone to help you navigate through the selling process. To put it differently, you can trust that we’ll do the heavy-lifting upfront to maximize results. No matter the size, shape or value of the property, you will be working with a best-in-class team every step of the way to prepare your home sale and work with you to align on the best pricing strategy!
If you’re interested in exploring pricing, strategy and expected outcomes, feel free to share your thoughts using our Seller Intake Form – 5 minutes tops to get things started on the right foot!
Of course, if you have additional questions, feedback or comments, feel free to reach out. Contact Us (We’re Nice)!
This article was written by Kori Marin, Managing partner here at Fox Marin Associates. For high-energy real estate aficionado Kori Marin, a well-lived life is achieved by maintaining an “all-in” attitude that realizes every last ounce of one’s full potential. This mindset has driven successful results in every aspect of her life – from her corporate sales and account management experience to her international travels, to her years of fitness training and leadership – and is the hallmark of the exceptional work that she does on behalf of her clients in the residential real estate sector in downtown Toronto.