THE PRINCIPLES OF PRICING
The most critical part in preparing a Muskoka Cottage for market is determining the correct listing price.
Naturally, one wants to realize the highest possible return from the property. It is obvious that pricing a cottage too low cannot provide the highest return. However, it is less obvious, but true, that pricing a property to high will also produce less than the best return. The right price produces the best return. Too high a price is costly because it causes a property to "miss the market". When a price is too high, those buyers for whom the cottage would be right for may not view it because it is out of their price range. Buyers who are in the price range will not see the property as a good value based on comparables and will buy something else.
Further, agents will be reluctant to show an overpriced property, except perhaps to make a competing property look more attractive by comparison.
It is tempting to want to test the market at a high price. While there may seem to be no harm in starting high and lowering the price if necessary, testing the market can be risky. A property receives its fullest exposure during the first three weeks on the market. During this time the best buyers for that cottage will see the property, and if it does not appear to be a good value, these choice prospects will decide not to buy. And it is rare that such buyers will return to the property later, even if the price is reduced.
Thus, an owner who "tests" the market, may turn away the best of his potential buying prospects. And, if an offer is made that is low relative to the asking price, the owner may turn it down, when in fact it often may be the best offer received.
The overpriced offering often stays on the market and becomes "stale". Statistics indicate the longer a house is on the market the lower the selling price is in relation to the asking price.
Evaluating a home is part science and part art. Like science, the evaluation process should be based on evidence: the price paid for comparable properties in recent sales. Since no two cottages are alike, however, the evidence must be evaluated and a judgement reached. Because there is a great deal of emotional attachment to one's recreational property, the agent's professional judgement is vital to successful and accurate pricing.
In sum, the right price produces the best return. That is a principle you can count on.