September: The Listing Process
Pricing Properly and How to Do It
We’re diving into the art and science of home pricing—exploring smart pricing strategies, what they signal to buyers, how to read the market, and when to adjust. Whether you’re prepping to sell or just want to understand the process better, this guide will help you price with confidence.
1. Pricing Strategies: What They Are and When to Use Them
Let’s start with the core pricing strategies you’ll often hear about. Each one has its place—but knowing when to use it is just as important as understanding what it is.
Market Value Pricing
This is the most commonly recommended approach, and for good reason. It’s grounded in data, not guesswork. We look at similar homes (called comparables, or “comps”) that have recently sold in your area. These sales give us a clear picture of what buyers are actually willing to pay for homes like yours.
When to use it:
In balanced or slightly competitive markets, market value pricing gives you a strong position—you’re neither undercutting nor overreaching. It attracts serious buyers and usually leads to a sale within an expected timeframe.
Event Pricing (Strategic Underpricing)
This strategy involves pricing your home slightly below its market value—often by 3–5%. Why would anyone do that? The goal is to create urgency and generate multiple offers. In a competitive (seller’s) market, this can lead to bidding wars and ultimately a higher sale price.
When to use it:
Event pricing shines in a seller’s market, where demand is high and inventory is low. If your home is in a desirable neighbourhood or school catchment, it can bring in dozens of showings and multiple offers, often within the first week.
Pricing High (Aspirational Pricing)
This is the strategy most sellers are tempted by—setting a high price “just to see what happens.” But in most cases, it works against you. Buyers today are well-informed. If your home is priced above market value, you’ll lose out on early traffic when interest is highest.
What happens:
The home sits. Interest fades. Eventually, you’re forced to reduce the price, sometimes multiple times. This can give buyers the impression that something’s wrong with the property or that you’re desperate. It can actually lead to a lower sale price than if you had priced correctly from the start.
2. Matching Strategy to the Market
Understanding the kind of market you’re in is essential when choosing a pricing strategy. The strategy that works in a seller’s market may backfire in a buyer’s market. Here’s how to tell the difference:
What Kind of Market Are You In?
We assess the market using a metric called Months of Inventory (MOI), which shows how long it would take to sell all current listings at the current rate of sales.
Seller’s Market (MOI < 4 months): More buyers than homes. Homes sell quickly, often with multiple offers.
Balanced Market (MOI 4–6 months): Supply and demand are roughly equal. Prices are stable.
Buyer’s Market (MOI > 6 months): More homes than buyers. Buyers have the upper hand and more choices.
Your REALTOR® will help determine where your local market sits, as it can vary by neighbourhood and property type.
Matching Strategy to Market Type
In a Seller’s Market: Event pricing can be highly effective. It draws attention and maximizes your sale price through competition.
In a Balanced Market: Stick close to market value. Buyers aren’t rushing in, but a fairly priced home will sell well.
In a Buyer’s Market: Pricing competitively is key. Overpricing in a slow market often means long days on market and low-ball offers.
3. What Price Says to a Buyer
Price isn’t just a number—it’s a message. Buyers read between the lines and interpret pricing as a clue about the seller’s motivations and the home’s quality.
What Pricing Too High Signals
When a home is priced too high:
Buyers may assume the seller is unrealistic or not serious.
The home may not appear in search results if buyers are filtering by budget.
The longer it sits, the more buyers start to wonder what’s “wrong” with it.
Ultimately, you lose the momentum of the first few weeks when interest is highest.
What Small Price Changes Signal
Dropping the price can reinvigorate interest—but small drops (say, $5,000) may not be enough to bring in a new pool of buyers. Price changes should move the property into a new search bracket (e.g., from $755,000 to $749,900) to be effective. A drop can also signal to buyers that the seller is motivated, which might encourage offers.
4. How Much Should You Adjust the Price?
If your home has been sitting on the market longer than expected or feedback suggests it’s overpriced, it’s time to adjust.
General Rule:
Price reductions of 3–5% are typically effective. This size of adjustment is enough to generate renewed interest without sending the wrong message.
For example:
A home listed at $750,000 might drop to $725,000 or $715,000.
A $10,000–$20,000 reduction in this range puts the listing into a new bracket and reaches new buyers.
Avoid a series of small cuts—they often lead to “price drop fatigue” and make the seller seem reactive rather than strategic.
5. What Actually Determines Price?
A good pricing strategy starts with understanding what factors go into a home’s value. Here are the most important ones:
Comparable Sales: The most critical data comes from recently sold homes that are similar in size, age, location, and condition.
Active Listings: These represent your competition. Even if they’re overpriced, buyers will compare your home against them.
Home Condition: Renovated kitchens and bathrooms, upgraded windows or HVAC systems, and fresh paint all increase perceived value.
Location: Desirable school zones, transit access, walkability, and neighbourhood amenities all play a role.
Lot and Layout: A corner lot, open-concept design, or finished basement may all contribute to higher value.
Market Conditions: Interest rates, employment trends, and broader economic signals can influence buyer behaviour and confidence.
6. Actively Listed vs. Sold Comparables
When pricing your home, we use both actively listed and recently sold homes to build a pricing picture.
Sold Comparables: These show what buyers have actually paid. They are the foundation of pricing strategy and are used by appraisers and banks to validate a sale.
Active Comparables: These show the competition. Even if they haven’t sold yet, they’re part of the decision-making process for buyers and should influence where your home fits in the market, but they are not as important as what has actually sold.
A smart pricing strategy looks at both: Sold comps set the baseline, while active listings help you understand how your property stacks up in today’s environment.
Final Thoughts
Getting the price right isn’t about picking a number—it’s about positioning your home for success. It’s a careful balance between data, market understanding, and knowing what motivates buyers.
If you’re thinking about listing, the best first step is a detailed market analysis with a trusted local expert (like us!). We’ll help you understand your home’s market value, how it compares to others on the market, and which pricing strategy gives you the best shot at success.
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