The Higher You List Your Home, the Lower Your Sale Will Be

One of the most common disagreements between homeowners and real estate agents happens before the home even hits the market. The price. A seller naturally wants to get as much money as possible for their home. So when an agent recommends listing at $900,000, it's understandable for the homeowner to think, "Why don't we try $925,000? We can always reduce the price later." It sounds logical. Unfortunately, especially in a declining real estate market, it can have exactly the opposite effect. Listing your home for more doesn't mean you'll sell it for more. In some cases, starting too high can actually cause your property to eventually sell for less. And I recently had a real-life example here in Surrey where two extremely similar condos in the exact same building demonstrated exactly how this can happen. The property that started with the lower asking price ultimately sold for $10,000 more—and did it 11 days faster.

Why Sellers Naturally Want to Start Higher

I completely understand why homeowners want to test a higher price. First, most people have a lot of pride in their homes. You remember the renovations you've completed, the money you've spent and all of the little things you've done to maintain the property. It's natural to place value on those things. Second, sellers aren't usually studying the real estate market every day. They might remember what a neighbour sold for six months ago or see another property listed for a certain amount and assume their home should be worth something similar. And finally, there's the fear that the real estate agent simply wants to list the property lower because it will be easier to sell.We've all heard some version of this: "The agent just wants a quick sale and an easy commission."There actually is some truth to the first part.I absolutely want my listings to sell quickly. But probably not for the reason you think.

Homes That Sell Faster Tend to Sell for More

When I look at the relationship between average days on market and the percentage of asking price sellers ultimately receive, the two tend to move in opposite directions. As days on market increase, the percentage of asking price achieved tends to decrease. That makes sense when you think about how buyers behave. A brand-new listing gets attention. Buyers who have been searching for weeks or months receive notifications about it. Their agents see it. People book showings. Everyone who's currently looking for that type of property has a reason to pay attention. That's your moment. The longer the property sits without selling, the conversation starts to change. Instead of buyers asking: "Could this be the one?". They start asking: "Why hasn't it sold?". That's a very different question.

Your Listing Gets Its Best Opportunity When It's New

I sometimes compare the real estate market to a dating app. There is a pool of buyers searching for a certain type of property. Your listing suddenly appears in front of them. They look at the photos, location, condition, size, features and, most importantly, the price. Then they make a decision. Do I want to see this property? If the answer is no, they move on to the next one. The problem with overpricing is that you can lose a large portion of your best potential buyers immediately. They don't necessarily come back just because you reduce the price three weeks later. Some have already purchased something else. Others have mentally dismissed the property. And some will notice the price reduction and interpret it as a sign that the seller is becoming more motivated. Instead of creating urgency among buyers, you've potentially created negotiating leverage against yourself.

A Declining Market Makes Overpricing Even More Dangerous

This becomes particularly important when home prices are falling.Imagine your home is worth approximately $900,000 today, but you decide to list it at $950,000.You try that price for a few weeks.It doesn't sell.So you reduce it to $925,000.Still nothing.Eventually, you get to $900,000.The problem is that several weeks or months may have passed.If the market has continued declining during that time, the property that was worth $900,000 when you originally listed may now only be worth $875,000.You're finally asking yesterday's market value in today's market.And you're still overpriced.That's how sellers can end up chasing the market downward.

Two Condos in the Same Surrey Building

Recently, we had an almost perfect real-world example of this.Two condos were listed in the exact same high-rise building here in Surrey.The building was constructed in 2008, and both properties were very similar.Listing number one was on the 31st floor.It had two bedrooms, two bathrooms, approximately 774 square feet and one parking space.Our listing was on the 10th floor.It also had two bedrooms and two bathrooms, but it was slightly smaller at approximately 745 square feet. It also included one parking space.On paper, you might immediately assume the 31st-floor property should sell for more.It was larger.It was significantly higher in the building.And even the BC Assessment values suggested it should be worth more.The higher-floor property had an assessed value of approximately $494,000.Our property was assessed at approximately $458,000.That's a $36,000 difference.But assessed value doesn't determine what a buyer will pay today.The market does.

The Previous Sale Was $450,000

The most recent comparable sale in the building had occurred at approximately $450,000.It's easy to understand what happened next.The owner of the higher-floor unit listed at $459,800.From a seller's perspective, that probably felt reasonable.The last one sold for $450,000.This unit was larger and on a much higher floor.Why not start a little above the previous sale and leave some room for negotiation?The problem was that the market had continued to decline since that previous sale.Yesterday's comparable wasn't necessarily today's market value.

We Listed Lower

When it came time to price our client's property, we had a decision to make.We could look at the previous $450,000 sale, look at the competing property listed at $459,800 and try to push our asking price higher.Instead, our client agreed to price according to what we believed the current market would support.We listed at $448,785.That meant our asking price was more than $10,000 below the competing property.It was also below the most recent comparable sale.That can be uncomfortable for a seller.But our objective wasn't to win the contest for the highest asking price.Our objective was to achieve the best possible selling price.There's a big difference.

The Higher-Priced Listing Sold for $430,000

The competing property did eventually sell.It took 23 days during its most recent listing period and sold for $430,000.That's almost $30,000 below its $459,800 asking price.And there's another important detail.Before that 23-day listing, the property had previously been on the market for another 46 days and had already experienced a price reduction.So buyers had been exposed to that property for considerably longer than the most recent listing period alone would suggest.To be fair, this wasn't a poorly marketed property.It was represented by a good agent, and the marketing was well done.The property itself also had some obvious advantages over ours.It was larger and substantially higher in the building.But the market had spoken.

Our Lower-Priced Listing Sold for $440,000

Our property sold in 12 days.Final sale price: $440,000.So the property that started with the lower asking price sold for approximately $10,000 more than the property that started higher.And it sold 11 days faster based on the competing property's most recent listing period.Our seller didn't leave money on the table by pricing more aggressively.The strategy helped attract buyers while the listing was fresh.That's the distinction sellers sometimes miss.Your asking price and your selling price are not the same thing.

The Goal Isn't to Sell Your Home Cheap

This is important.I'm not suggesting that every seller should simply list their home below market value.That's not the strategy.There are situations where intentionally listing significantly below market value to generate multiple offers can make sense.There are other situations where pricing directly at market value is the better approach.And there are markets and property types where a different strategy may be appropriate.The objective is to understand what buyers are actually willing to pay and position the property accordingly.Pricing isn't about choosing the highest number you can justify.It's about creating the strongest possible market response.

There Are A, B, C and D Buyers

One way I think about buyers is based on how serious and motivated they are.Your best buyers—the A buyers—are already in the market.They've probably seen everything comparable to your home.They understand prices.They have financing organized.Their agent is sending them new listings.When the right property appears, they're ready to act.Those are the people I want paying attention when your home first hits the market.As a listing sits longer, you can begin attracting a different type of buyer.They're often looking for listings that have been sitting.They're watching price reductions.They're looking for signs of seller motivation.And they're more likely to submit aggressive offers.That's why the first few weeks of a listing can be so valuable.

A Price Reduction Doesn't Reset the Clock

This is another misconception.Sellers sometimes think:"Let's try the higher price first. If it doesn't work, we'll reduce it."The problem is that reducing the price doesn't make the listing brand new again.Buyers can see the history.Their agents can see the history.They know how long you've been trying to sell.They may know you've already reduced the price.And that information can influence how they negotiate.A property listed correctly from day one can create urgency.A property that's been reduced several times can create the opposite.Buyers start wondering how much lower the seller might go.

Buyers Compare Your Home With What's Available Today

Another reason overpricing can hurt is that buyers don't evaluate your property in isolation.They're comparing it with everything else they can buy.If there are 20 similar properties available and yours is noticeably more expensive, you're helping the other 19 sellers.Their properties look like better value because yours is overpriced.That's particularly dangerous in a buyer's market where there are more listings than purchasers.Your home doesn't simply need to be good.It needs to compete.

BC Assessment Doesn't Determine Market Value

Our Surrey condo example also demonstrates something else I regularly discuss with sellers.BC Assessment is not the same as current market value.In our example, the competing property had an assessed value approximately $36,000 higher than ours.Yet our property sold for $10,000 more.Why?Because real buyers aren't buying an assessment.They're walking through the home.They're looking at condition.They're comparing finishes.They're evaluating layout.They're considering the building.They're looking at the competition.And they're deciding what that specific property is worth to them today.The same applies to floor level.Developers can often charge premiums for higher floors when selling brand-new condos from a presentation centre.Eighteen years later, condition and presentation can become much more important.

Marketing and Pricing Have to Work Together

Good marketing matters.Professional photography matters.Presentation matters.Exposure matters.The description matters.The agent's ability to communicate with buyers and other agents matters.But marketing can't completely overcome an unrealistic price.You can have the best photos, videos and marketing campaign in the neighbourhood, but if buyers believe the property is substantially overpriced, they're still unlikely to write an offer.The price is part of the marketing.In fact, it might be the most important part.

Sellers Need to Listen to the Market

Once a property is listed, the market starts providing feedback almost immediately.If you're getting lots of showings but no offers, buyers may be telling you something.If you're getting very few showings, they're telling you something even louder.If similar properties are selling while yours remains available, that's important information.A good listing strategy shouldn't be stubborn.It should respond to what the market is telling you.The objective isn't to prove that your original asking price was correct.The objective is to get your home sold for the best possible price.

The Highest List Price Doesn't Win

This is ultimately the biggest lesson.When interviewing real estate agents, sellers sometimes gravitate toward the person who suggests the highest asking price.I understand why.If one agent says your home is worth $900,000 and another says $950,000, obviously $950,000 sounds better.But an agent doesn't determine what your home is worth simply by saying a bigger number.The buyer determines what they're willing to pay.The market determines what comparable properties are selling for.Your agent's job is to interpret that information and develop a strategy designed to produce the strongest possible result.Sometimes that means telling a seller something they don't particularly want to hear.

Pricing Correctly Is About Making More Money, Not Less

When I recommend a particular asking price, my objective isn't simply to sell the property as quickly as possible.It's to create the best combination of price, timing and certainty for the seller.And sometimes selling quickly is part of achieving the highest price.Our recent Surrey condo sale is a perfect example.The competing property had several apparent advantages.It was larger.It was on a much higher floor.It had a substantially higher BC Assessment.And it started with a higher asking price.Yet our seller sold faster and for approximately $10,000 more.Not despite the lower asking price.There's a strong argument that it happened, at least in part, because of it.

Your First Price May Be Your Most Important Price

In a strong seller's market, you might be able to make a pricing mistake and have the market bail you out.When prices are rising quickly, waiting can sometimes work in your favour.In a declining market, the opposite can happen.Time can become your enemy.That's why getting the price and marketing strategy right from the beginning is so important.You want buyers excited about your property when it first appears—not waiting for your third price reduction before they decide to take a look.Simply listing your home for more money doesn't make it worth more.Sometimes the best way to ultimately sell for more is to resist the temptation to ask for too much in the first place.

Written by:
Steve Karrasch PREC
Karrasch Real Properties Team
Macdonald Realty