Not exactly. And 100% not the case in our current market.
Toronto and all surrounding markets are currently experiencing the biggest lull/down market since 2017’s 16-point housing plan and the 2008/09 recession before that. The biggest drivers being interest rate hikes (to combat our 31-year high of 6.8%) and consumer confidence – Buyers are taking a wait and see approach, which has Sellers on their heels – forced to adjust expectations – sorry, you can’t get what your neighbour got in Jan/Feb, not today!
The 3 most common pricing strategies used are:
- Buffered – Above Market Value
- Desired – At Market Value
- Offer Date/Offer Deadline – Under Market Value
Each has its own benefits and pitfalls. It’s extremely important to understand current market conditions and choose the pricing strategy that is most suitable – both to the market & to your (the Sellers’ needs).
When properties sell OVER asking, it’s because the Seller has chosen to intentionally underprice – Pricing Strategy #3. We’d only advise a Seller to do this when the market is HOT – or there are (many) more Buyers vs. Sellers – or more demand vs. supply. The objective is simple, list the property for a number well below the market value, get as many eyes/traffic through the property as a result, to hopefully get as many written offers as possible, to drive up the top bids, and hopefully establish a new market record/precedent vs. the last comparable sale in the neighbourhood.
BUT – in our current market, a market that is presently experiencing a downturn and reversion in pricing, that strategy could be suicide!
You’re likely better off pricing at or just above market value.
It’s like the good ol days, the price you see is the price the Seller wants/expects, and guess what, you can actually negotiate and maybe even have a condition or two in your offer … Wow, what a treat!
Remember, if you read an article entitled “Toronto Home Sells 50% Over Asking” – it’s just click bait. “Over Asking” is a meaningless statement, it tells you nothing.
For example: if I advertised my iPhone 13 Pro Max for $1000 and sold it for $1500, I’d have sold it for 50% over asking. But guess what, the retail value (or market value) is approx. $1500 … so I’d have sold it at market value effectively. But can’t argue that it makes me sound like a star baby … or a lying sack of s___!
So, the real question should always be, what % of market value did you sell the home for – over, at or under? And the answer to that depends largely on the market itself – which then dictates the marketing/pricing strategy.
Hope that helps!