In all my years as a real estate agent in Markham, I’ve seen an inordinately high amount of listings sell for more than the list price. It’s almost become the norm in certain neighbourhoods at certain price points.
Now it’s one thing to dissect this aspect of the market from a buyer’s perspective when trying to win a bidding war, but today, I’m going to take a closer look from a Seller’s perspective.
If you take a drive through the streets in Markham on any given day, you’re bound to find a handful of “Sold Over Asking” riders stuck to “For Sale” signs. Like I said, it’s almost become the norm. But what do these mean?
Unfortunately, many homeowners are easily impressed when they see this but there’s usually much more to the story. You see, a house that sold over asking is a good thing, if it was listed at or above its true market value. These days, many agents like to “under” list a home in an attempt to create competition. Thus, resulting in a sale above the list price. That’s all fine and dandy if the seller is pleased with the result but there’s more to this game that you should be aware of.
Let’s take a typical townhome in Markham for example. Let’s also assume that we’ve examined all the appropriate comparables, current market conditions and we can confidently value the home at $500,000. Now, if this home was listed at $479,000 and held off offers for a week it would almost surely attract multiple offers. The real question, though, is will it sell for market value ($500k), more or less?
Does the agent who sells that home for $495,000 in a week do a better job than the agent who lists it for $519,000 and sells it for $507,000 but it takes 5 weeks? Well, the first agent will be happy to put up their “Sold Over Asking” rider on the sale sign for the neighbours to see, and use it to promote themselves but the second agent netted the seller $12,000 more.
I’m not saying that setting an offer date is a bad thing. In fact, it can be extremely successful if your house is thought to be very desirable and in short supply but there’s always some risk involved.
What if you under list your home and you don’t get any offers or you don’t get an offer you like? In that scenario, most agents cancel the listing and re-list at a higher price. Once you’ve started down this avenue, however, many buyers will start to wonder about the price and most agents will argue that if it didn’t sell at a lower list price, then the market is trying to tell you something.
If you and your agent decided that you wanted to set an offer date, another option would be to simply list your home at a higher price point, such as $519,000 in the previous example and see if you can still generate some competition. A good agent with a great marketing plan will increase your exposure and give you increased odds of achieving such a goal.
In writing this post, my whole point is to make you aware that there can be a lot of strategy involved when pricing a home and that a real estate agent’s sold statistics and a house that sold over asking doesn’t always tell the whole story when choosing the right agent. When it comes to a real estate agent’s personal statistics, per say, I recommend taking those with a grain of salt.
Personally, I’ve always been very proud of my sold statistics. Last year, my listings sold 42% faster and 1.31% higher than the average Realtor resulting in $6,289 more money for my sellers per home sold. The year prior, my listings sold 56% faster and 2.9% higher resulting in $14,224 more money for my sellers. But these numbers can vary greatly for any agent depending the type of listings they had that year and how they priced them. It’s also worth noting that if an agent originally priced a home at say, $899,000, cancelled the listing after 3 months and re-listed the home at $799,000 and sold it for $792,000, their “sale to list” ratio would show as 99% instead of the 88% that it should be.
So, what does sold over asking really mean? Well, nothing without knowing more about the deal. Real estate agents all love to put those “Sold Over Asking” riders on their for sale signs, myself included. We also love to tell people all about our great sale numbers, but beware, these claims aren’t always reflective of a good agent.