There are four basic variables when it comes to the marketing of any product or service. If you took any sort of marketing 101 back in college, you may recall them being referred to as the four P’s; product, promotion, placement, and of course, price. When it comes to real estate, there’s not much we can do within the “placement” category as this generally refers to the distribution of a product or the area of service which of course is a set variable when it comes to real property.
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A Closer Look at the Marketing Mix
That said, the other three parts of the marketing mix are ever more crucial to the successful sale of your home, and you’ll find no shortage of business models to choose from when you do start thinking of selling.
When it comes to marketing you’ll find a wide range of service offerings, which include your basic no frill listing service to your full service more established agent that offers an array of services and marketing options to choose from.
I’m obviously biased here, as we represent one of the top groups within our brokerage offering a full service to our clients with exceptional results to show for it; but when it comes to selling one of your largest assets, it’s easy to understand that the stakes are high. Those Sellers that choose sub standard representation to save a minor amount of commission have never made much sense to me and in my own opinion generally net less capital overall.
I’m going to focus more on the marketing activities here, but there’s of course another blog to discuss effective selling and negotiation tactics. You can read it right here.
So from a product perspective, we want to make sure the property in it’s best possible form, and all of this work is done pre listing, usually in the form of renovations, repairs, painting, and staging.
The promotion aspect not only includes some of your more traditional pieces of marketing like flyers and digital and print advertising but also includes how the listing is presented on the MLS system itself and to other colleagues within the industry.
Do you have more questions about selling your home? Here are some more posts you might find helpful:
- Do You Need an Open House to Sell Your Home
- Why Hiring Your Friend to Sell Your Home Might Be a Bad Idea
- Should I Get a Pre-Listing Home Inspection?
The Most Important Piece of the Puzzle: Pricing
But perhaps the most crucial piece of the marketing mix is how to price your property? This may seem like the most simple decision to make for some sellers and agents a like, but it is truly a controversial topic within the industry and requires careful thought in order to achieve success.
For those of you unfamiliar with the pricing practices within the industry, there’s generally two major strategies.
Option 1: Price High
The first is to price your property at or maybe even slightly above true market value. Despite what some sellers believe at first, you cannot simply pick a price that you “want” that is wildly out of line with market values and expect to sell. The market is actual more efficient than many people know, and overpriced listings do not sell well. They often end up selling for less than they should have, if a proper pricing strategy was followed in the first place.
Option 2: Underprice
The second major pricing strategy is the more controversial choice and involves underpricing the property either slightly or, more often, drastically under market value. I’m sure most of you reading this have seen that stunning renovated four-bedroom, detached home listed for $999,000.. and thought that seems too good to be true. Well, it is!
This is the type of pricing that drives buyers unfamiliar with true market values crazy, as it is intended to create multiple offers on the property and have buyers bid blindly against each other in the hopes of achieving a sale price at or even above “market value”.
You’ve got questions about selling your home, we have answers. Here are a few more posts you might find interesting:
- Do I Really Need Staging to Sell My Home?
- Should I Renovate My Home Before Selling It?
- Are Discount Real Estate Agents Worth It?
So, Is Underpricing Your Home a Good Idea?
And if done correctly, its very effective strategy. I tell sellers that are thinking about pursuing this type of pricing, to think of the price tag more simply as another piece of the marketing mix and not directly correlated with the value of their home. But despite what some people may think, this list low strategy is not a fool proof blanket strategy for every listing and can backfire if not executed properly.
The first thing to think about before you make a decision on pricing is where the overall market sits. If you are going to under list a property and expect to sell it for much higher in multiple offers, the market has to favour the seller and you’ll need to make sure there’s enough buyer demand out there to push the price up.
The second major thing to consider is the property itself. Even in the world’s hottest sellers market, not every property is going to see multiple offers. You really need to have a property with mass appeal that is turnkey and move in ready if you expect buyers to line up for it. Properties in need of renovations, tenanted properties, or less desirable locations are generally going to need more exposure to the market then a list low strategy will provide, and appeal to a more select buyer demographic. Listing a property like this much lower than it’s true value in an effort to create a bidding war can often deter qualified buyers and agents a like, leading to less successful sales results.
Looking for more help with home pricing? Read this blog next.
The Truth: Talk to an Expert
As always, you should have a candid conversation about pricing and value with your agent prior to listing, and make sure you’re working with someone who understands what strategies make the most sense for your property in order to obtain the best possible price.
Looking for home-selling advice? Please reach out at any time by calling 416.642.2660 or emailing admin@torontorealtygroup.com. We’re always happy to chat!
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