Selling Your Home in Today's Market: Why the Right Price Matters Most

In August 2023, average home prices in the Niagara region dropped by about 5% in a single month. In this episode of the Niagara Real Estate Podcast, Joe Gonzalez and Kevin Murphy talk about what that means for anyone trying to sell, and why pricing your home right from day one matters more than anything else.

This episode was recorded in September 2023. The numbers are from that time, but the pricing lessons apply in any market.

“Chasing the dragon”

Kevin has a name for what happens to overpriced homes in a falling market: chasing the dragon.

Here’s a simple example. Say a home is worth $1,000,000 and the seller lists it 5% higher to leave some room. Average days on market is around 30 days. If the market drops 5% while the home sits unsold for 40 days, it’s now about 10% above where it should be. To catch up, it needs a $100,000 price reduction. That’s more than most people earn in a year, and it’s a hard pill to swallow.

When prices are falling, an overpriced listing doesn’t wait for the market to catch up. The market runs away from it. Every week past the average days on market can cost the seller money.

Equity isn’t real until you sell

Joe compares home equity to chips on a poker table: the money isn’t really yours until you leave the table. If you’re staying in your home, price swings are mostly on paper. But once you’ve decided to sell, that equity is coming off the table, and every drop in the market comes straight out of your pocket.

At the right price, a home sells

According to Kevin, the most important factor in selling isn’t who lists your home or how it’s marketed. If it goes on MLS® at the right price, it’s going to sell.

Marketing and representation still matter. Good marketing can bring a second offer, even in a slower market. Just before this episode, a home they showed sold for about $50,000 over asking. Strong negotiation helps you get the most money and the best terms. But price comes first, because at the right price, a home sells.

A real example of what overpricing costs

Kevin shared a listing from when the market first turned after the 2022 peak. The seller wanted to start a little higher than the recommended price. It took too long to correct, and every reduction after that was still behind the market. Kevin estimates it cost the owner $50,000 to $75,000 compared with listing at the recommended price from the start.

Overpricing shrinks your buyer pool

Listing even 5% above fair market value can cut the number of buyers who look at your home roughly in half. So not only is the market running away from you, you’ve also lost a big share of the people who could have bought it. Fewer buyers means fewer showings, fewer offers and less negotiating power.

Why 2022 changed seller expectations

In late 2021 and early 2022, it was common to list homes low on purpose, because multiple offers were almost guaranteed. Sellers trusted that the price would get bid up. Today, Kevin says, a seller who wants to list low is unheard of. Most of the challenge is convincing sellers to list where the home should be, rather than too high.

How to price your home right

• Interview a few REALTORS®. Ask each one how they arrived at their price.
• Trust the person you choose. You’re trusting them with your biggest asset. If they can show you their comparables and their reasoning makes sense, trust it.
• Do your own homework. If a number seems pulled out of thin air, ask more questions.
• Get it right out of the gate. Your first few weeks on the market are your best chance.

Already listed and not selling?

If you’ve only been on the market a week or ten days, take a breath. But if your home has been listed longer than about 30 days with no price change, it’s time to sit down with your REALTOR® and re-evaluate.

If you do choose to start higher than recommended, Kevin’s advice is to have a plan for how quickly you’ll adjust, so you’re not left behind if the market keeps moving.

Questions answered in this episode

How do I price my house to sell in a falling market?

List at fair market value from day one, based on recent comparable sales your REALTOR® can show you.

What happens if I overprice my home?

You lose buyers, sit on the market longer, and in a falling market you may need bigger price reductions later.

When should I reduce my price?

If you’ve been listed longer than the average days on market without strong interest, talk to your REALTOR® about adjusting.

Does marketing matter if the price is right?

Yes. Good marketing and negotiation help you get the most money, but they can’t sell a home that’s priced too high.

Thinking about selling in Niagara?

We’ll show you exactly how we priced your home, with real local sales behind every number.

Call 289-276-1716 or get your home value.