With the recent headlines of a 4-bedroom house in Vaughan selling for $400,00 over the asking price, it only seems fitting to address the issue of ‘Sold Over Asking’ claims as it is becoming more common place in our market. The exception has now become the norm!
 
Accurate Claim or Misleading List Price
Looking at this specific house, there have been 4 sales of detached 4-bedroom homes in the immediate area in the past 4 months, including the house above. The average selling price of these homes is $1,216,000; the median selling price is $1,150,000 and the average selling price was 123% of list price.

Though technically the $400,000 over asking price is factual, if all the similar sales in the area are selling for about the same price, is this claim of ‘Over Asking’ accurate based on the selling data? Or did the house sell for what it should sell for and was merely under-priced from the outset?

It can be misleading, unfortunately, because if a house is listed at a ridiculously low price, it virtually guarantees a bidding war that is going to all but guarantee the now common “SOLD OVER ASKING’ seen on most Sold signs.
 
The Danger of Under-Pricing
Let’s look at it another way. Two similar homes, with the same square footage and updates, are sold in the same neighbourhood, with a value of about $525,000 - $550,000 each.

One lists for $529,900 and, on the offer date, the buyers push the price to $580,000. The list price reasonably reflects where the prices are at that time.

The second home uses the ‘extreme low price’ strategy and lists for $475,000. This almost identical home sells, again in a bidding war, for $560,000.

Though both Realtors can claim to have ‘SOLD OVER ASKING’, one of them was intentionally under-priced to get that result and ended up netting the seller less than it should.  
 
Don’t Leave Money on the Table
Was the highest selling price achieved? There are always intangible factors that may affect the sale of a house, however, one fact is quite clear: a nearly identical house sold for about $20,000 less. It’s a lot of money to leave on the table, just to add ‘sold over asking’ to a lawn sign.
 
Find Out What Your House is Truly Worth
What’s truly impressive is when a house is priced accurately, based on comparable sales data and then achieves the over-asking result. The next time you see those words on a real estate sign, take a moment to wonder why. There are times and circumstances where under-pricing by a few percentage points does make sense. Rarely should those times be about a Realtor’s marketing claims after the fact. We have a fiduciary obligation to earn our selling clients the most for their house. It should only be about what is best for our client.

If you or someone you know is thinking about a sale, let’s get together and look at the data in the market at that time. We can determine what your house is worth, prepare a market analysis for you and determine the best strategy when setting a list price.

When our team sells your house for more than the list price, we’ll never put “SOLD OVER ASKING” on your lawn. SOLD is the only word you will see. Promise!