There was a house in Waterloo with a list price of $799K. It sat on the market for about three weeks then the listing was cancelled. The next day it was re-listed at $650K. Suddenly I had three clients that wanted to see it.
Then what happened? It sold. Two bully offers suddenly materialized and they meant business.
Here’s the interesting part. What did the property sell for? $785K – 20% over list price and within 3% of its initial list price. It turns out that $799 was clearly the right price. But it was right price for the wrong market.
It’s funny how quickly things change.
Seller, buyer and agent expectations have changed. We expect everything to sell for more than $100K over asking, something that was unheard of 18 months ago
There was another house listed in the North Ward of Waterloo. Over $500K for a bungalow seems a little high. But the place was all done up and looked fabulous. When I booked the showing, the agent called me. That’s unusual. Sometimes you get call for feedback or lost keys or informed of incoming offers after a showing, but not before. He called because he wanted to explain to me that he had had several calls from other agents asking him if he was expecting $100K over asking. “No”, he said, “he had priced it in conventional ways”.
It didn’t sell.
It use to be in Waterloo Region that the high majority of listings sold within 3% of list price. This means for example, listing a house at $500,000 sent a message to all agents that the seller was expecting something between $485K and $500K. If there were multiple bids, chances were that the place would sell for as much as $515,000. However, getting more than that was unexpected.
We are quite conservative here in the Region of Waterloo. Uh yeah, we are.
So all that went out the window last year
Now the conventional approach anecdotally does not work. The rules have changed and the old rules now confuse us.
List price. What is it good for?
So what is the list price? What does the list price represent, if anything?
I think it is a guideline, or a starting price. It has to be high enough so that you don’t shoot yourself in the foot, generating a bunch of low-ball offers but low enough to generate competing offers. Those are the new rules.
Often the list price is the price that the best comparable recently sold for.