Asking price vs. selling price: what's the difference in real estate?

What is the asking price?

The asking price, also known as the listing price, is the amount you advertise your property for sale. Since price is a defining factor in whether your property is sold or not, setting a fair asking price at the onset is important. Buyers will ignore overpriced properties, impacting your sale. If your asking price is too low, you could attract plenty of willing buyers but lose out financially.

Seeking out the services of a property practitioner can help you set a realistic asking price based on the market value of your home. They will do a Comparative Market Analysis (CMA) to compare your property to recently sold similar properties in your area. This information is based on the actual selling prices recorded in the Deeds Office when properties are transferred. In addition to the CMA, here are the factors taken into consideration to pinpoint your house's market value:

• An assessment of recent sales over the last three to six months to gauge what buyers are paying.
   
• The location of your property. A popular location will command a higher asking price.
   
• Your property's age, size, and condition. A property in great condition and with sought-after features such as parking, sophisticated alarm systems, and a neat garden can add value. 
   
• The trends in your area. New developments and amenities such as malls, parks, and restaurants can add a premium to your asking price. 
   
• The amount of property stock in your area. If there's a shortage of properties for sale, buyers will face competition which gives you an edge. On the flip side, having lots of properties for sale in your area gives buyers more options. This oversupply means you will have to make an allowance with your pricing. 

A property practitioner who is a local area expert will have a record of achievement in your area. Plus, they will have all the information needed to justify the price to potential buyers. With their help, you can secure the price you're after. 

What is the selling price?

In contrast to the asking price, the selling price, also known as the sale price, is the amount your property is actually sold for. A question sellers often ask is if houses always sell for the asking price. The selling price is influenced by the offer and negotiation stage. During this process, it can be made lower, higher, or even remain the same depending on the outcome. Your asking price, however realistic it is, should be considered a strategy and not an end game.

As a seller, you should partner with an experienced property practitioner who can guide you on the most accurate pricing for your home. Avoid testing the market by listing at a higher price. You could potentially alienate well-informed buyers who will simply ignore your properties and opt for similar, affordably priced properties on the market. Your property will stay on the market for long and become "stale". This will make it harder to sell and even force you to drop your price lower than what it should be. Price to sell, not to negotiate down. 

Keen buyers can also make strategic moves and get a favourable selling price. With the help of a savvy property practitioner, you can potentially buy a house for less than the asking price. Here are some tips to secure an offer lower than the asking price:

• Know your market: In a buyer's market, there are plenty of properties but not enough buyers. This makes it easier to negotiate to your benefit. 
   
• Keep tabs on the listing: If the property has been on the market for a long time and even reduced its pricing, it could mean less interest. You could use this to see if the seller would be motivated to drop their price. 

A note of caution, though. Never assume a "price reduced" tag on a listing is out of desperation. Markets are dynamic, and during slower periods sellers could be adjusting their pricing to attract genuine buyers with a more realistic offer. 

• Evaluate the property: Are there any major renovations required to get the property in order? This can be a powerful incentive to get a drop in pricing. Visiting the property multiple times, especially with a property practitioner, can help you discover any potential issues. 
   
• Uncover the seller's motivation: Knowledge is power in negotiations. If your seller is emigrating or has an eye on another property, you can use this to prompt a quick sale. You can even use this to compromise for their benefit. For example, you could offer to buy some of their furnishings or be flexible on seller move-out dates. 
   
• Submit an offer in writing: When you've gathered all your data about the property, you can use this as a motivation to request the seller to lower the price. A respectfully worded letter with all of the facts will present you in a favourable light. It will also give the seller time to consider your offer at their leisure. 
   
• Have your financing in check: Showing you have the potential to afford the property is often a necessity. Regardless, having a pre-approval letter from your financial institution or bond originator can show you are a genuine buyer with the funds necessary to sign on the dotted line.

Navigate property pricing with Seeff

Whether you're buying or selling, property pricing can be an obstacle to making your property dream a reality.

If you're a seller, Seeff's property practitioners can help you set a realistic price that makes it easier to sell quickly and profitably. For buyers, our team is ready to find an ideal home and negotiate a fair price that fits your budget. Contact us today to get started.