The overwhelming majority of letters I received this month were about pricing listings. So, let\u2019s dig in on how you and your sellers can get the advantage in this market.<\/p>\n
Over 79.5% of Canadian homes listed for sale today aren\u2019t selling, according to an estimation based on Canadian Real Estate Association (CREA) data. Sellers can\u2019t understand why their homes aren\u2019t moving, and agents are struggling to tell the truth. This isn\u2019t a small issue \u2013 it\u2019s the defining challenge of our market.<\/p>\n
Why We Keep Getting It Wrong?<\/strong><\/p>\n The Bidding War for Listings<\/p>\n Too many agents set their suggested list price higher than they know is reasonable because they fear losing the listing to a competitor who promises more. In some cases, this is fully conscious. They know the market won\u2019t support the number, but they also know another agent will come in and tell the seller exactly what they want to hear.<\/p>\n Other times it\u2019s unconscious bias. Because we want the listing and don\u2019t want to disappoint the seller, we start seeing evidence that supports a higher number, even when the data doesn\u2019t. The pressure of competition makes it easy to round up without realizing it.<\/p>\n The Skills Gap<\/p>\n I\u2019ve seen several CMAs recently where agents used the MLS tools in ways that don\u2019t establish accurate market value. They\u2019re not choosing comparables effectively, they\u2019re not making accurate adjustments, and they\u2019re using average asking price data. This leads to recommended prices that can be significantly higher than market value.<\/p>\n Wishful Thinking isn\u2019t A Strategy<\/p>\n I\u2019ve watched agents give higher prices because they\u2019re sad the seller will lose money. I get it, but contributing to unreasonable expectations doesn\u2019t help a seller who needs to sell.<\/p>\n Many agents simply don\u2019t believe real estate prices have dropped as much as they have, or they assume recovery is around the corner. We don\u2019t want the market reality to be true, so we replace it with positivity.<\/p>\n I\u2019ve started using a new term: practical optimism. Be realistic about market conditions and positive about a potential sale. \u201cWhile the price won\u2019t be what it was in the COVID bubble, there are buyers out there, and with the right strategy and positioning, we should be able to get your home sold.\u201d<\/p>\n Why Sellers Overvalue?<\/strong><\/p>\n They Love What\u2019s Theirs The Waiting Game The Old Playbook Contributing to This Mindset :<\/p>\n \u2022 The Trust Gap : The trust deficit in real estate creates skepticism when an agent gives them a lower but more accurate number. They think you just want a quick commission.<\/p>\n \u2022 The \u201cI Have Time\u201d Myth : Some sellers feel that if they\u2019re willing to wait, they\u2019ll get a higher price. Agents reinforce this by suggesting a time\/price relationship. That\u2019s true in a rising market\u2014not in a flat or falling one.<\/p>\n \u2022 Industry Conditioning : Listing presentations have long been about promising high prices and flashy marketing, not the harder, more valuable skills of strategy and negotiation.<\/p>\n The Strategic Edge of Pricing Right<\/strong><\/p>\n Here\u2019s the opportunity : there are a finite number of buyers in the market, and they will offer on and purchase the properties that are most attractive, typically a combination of the home\u2019s attributes and the asking price. With most homes overpriced, you and your seller have a chance to price realistically, attract quality buyers, and secure a market value offer.<\/p>\n Think about this: if every listing got reduced to the current market value tomorrow, and the number of buyers remained fixed, the market value would fall quickly and significantly. So use those overpriced properties as the lever to get your client\u2019s home sold.<\/p>\n In a balanced market, it\u2019s not about the highest asking price. It\u2019s about the highest probability of a successful sale.<\/p>\n Communicating The Truth<\/strong><\/p>\n Truth \u2013 Empathy \u2013 Clarity \u2013 Courage<\/p>\n Truth : Assess market value accurately without bias. This isn\u2019t what you want it to be worth; it\u2019s what a buyer would be willing to pay.<\/p>\n Empathy : The truth is hard for some sellers to hear, but supporting unrealistic expectations is unprofessional and could be damaging. Let them know you understand how difficult this might be.<\/p>\n Clarity : Communicate directly. Avoid long-winded hedging that leaves sellers with false hope.<\/p>\n Courage : Deliver the truth. Most people need it.<\/p>\n And when they say another agent gave them a higher price? Respond truthfully: \u201cI have no doubt. There are lots of agents who will tell you what you want to hear to get the business. What data did they show you, and do you believe it?\u201d<\/p>\n The bottom line<\/strong>
\nPeople overvalue their own assets. Research shows that someone\u2019s maximum willingness to pay for an object is typically lower than the least amount they\u2019re willing to accept to sell it. That gap is huge in real estate.<\/p>\n
\nMost sellers have accepted recent market depreciation, but many feel if they wait they\u2019ll get a higher price. Interestingly, if you ask them directly whether the market will improve soon, most admit it\u2019s unlikely. They just don\u2019t want to accept it applies to them.<\/p>\n
\nMany sellers stick to the belief that if they ask more, they\u2019ll get more. They imagine perfect buyers are waiting who will pay above market, or that overpricing leaves room for negotiation. It almost always costs them.<\/p>\n
\nThe agents who master the skill and gather the courage required for accurate pricing are the ones who will thrive in this market. Not the ones with the highest promises.<\/p>\n