You don’t have to have much experience in the real estate market to know that listing your house in a seller’s market increases your chances of maximizing your sale price. That fact has been driving Guelph’s hot real estate market for the last couple of years and has made it challenging for buyers who see competitive bids driving up the cost of purchasing a home. According to some real estate experts, however, there are signs the market has capped out, which means having a proper pricing strategy could make all the difference when it comes to selling.
“In a market with a trajectory like we’ve seen here, it’s very common for list prices to follow sale prices upwards,” said Hudson Smith, head of a local team of Guelph Realtors at the Hudson Smith Real Estate Group. “As we see the market top out, which we have in a number of cases, there’s a barometer established now. People who set their list price based on the most recent sale prices are being challenged. In isolated instances, there are properties where we scratch our heads and go, ‘Wow, that sold for a lot of money’. But we’re seeing buyer fatigue. People are being pickier.”
Hudson said there are many different factors for what he perceives to be a stabilization in Guelph’s real estate market, especially with the busy summer months for real estate on the horizon. While he doesn’t believe that COVID-19 changed the market in any significant way, Smith says it did create a highly focused consumer group who were excited to set real estate goals and had the time to see them through. He sees that changing as pandemic restrictions ease in Ontario.
“I think as we come out of the lockdown, people will be distracted with other activities,” he said. “This is listing season as well, so there’s more supply coming up than before. People can only ignore high sale prices for so long before they decide to list their home. We have a market on an upswing creating more supply. All of these factors could distract what has been a completely undistracted audience of people. What we’re seeing is the need to have a proper pricing strategy when listing. You only have a short window of opportunity to maximize your sale price, so you want to be sure you’ve set the right list price for fast sale.”
If you’re considering marketing your home and your primary goal is maximizing sale price rather than just a quick sale, Hudson says the key is listing your property at a price where the majority of potential buyers see the value. He says when a market is on the verge of topping out, many people make the mistake of listing their house based on the eventual sale price of similar houses recently sold. In such instances, Smith says sellers are really setting a price based on the willingness of just one buyer eager to pay more than everyone else, instead of recognizing that 10 to 15 interested buyers felt the price was too high.
“When prices stop rising, it’s more important than ever to set the right listing price,” he said. “The market won’t lie to you. Your goal is to get a large cross section of people through to see your house so you have a high conversion rate, which means for a certain number of people through the property, you have a percentage of people actively pursuing the purchase. To do that, they have to see the value. It’s like paying $50,000 for a pool, then adding $50,000 to your list price and expecting someone to pay full value.”
In such an instance, Hudson says a smarter strategy would be to raise the value $25,000 to attract people looking to buy a home with a pool. “You’re creating a better audience because more people will see the value, and when they do, the market for your home starts to rise upwards.”
Ultimately, the market is driven by demand, and Smith says he’s been seeing the first few price drops in a long while as sellers adjust their list price to attract buyers. However, he says there’s no need for sellers to panic.
“We are seeing more homes selling for less than they’re asking, but not all. We’re still seeing lots of multiple offer scenarios. We still have a strong out of town audience. It’s simply more important to price where the majority of your audience recognize the value.”
Given the volatility in the market, Smith says there’s one important factor sellers need to consider: it’s never been more important to use a professional Realtor to maximize your sale value.
“You still have to have a really good agent working for you. Calls have to be made quickly. To an out-of-town buyer, street names like ‘Baltic Avenue’ and ‘Boardwalk Street’ would mean the same thing, because they don’t know anything about the area. Your marketing material has to be key. You have a limited amount of time to foster the best environment you can, and using a realtor is the best way to do that.”