Using Price as a Marketing Tool in a Hot Housing Market

A warming Edmonton housing market has prompted a top agent in the city to be “disruptive” in using list price as a marketing tool — much like agents in Toronto and Vancouver did when their markets were hot.

“We’ve been disruptive and changed buyer behaviour,” by pricing houses below those of comparable properties, says Taylor Hack, realtor and team leader of Hack & Co. and Re/Max River City in Edmonton. 

Works in hot markets because ‘buyers are predominantly afraid of two things’

Hack notes the strategy is not only about using a lower price to attract attention but also to drive that attention in a set period, such as opening weekend, and to attract multiple offers. Selling above the price of comparable listings is the end goal.

In hot markets, “It works because buyers are predominantly afraid of two things: missing the one or paying too much,” Hack says. “The more they fear missing the one, the more likely they would pay too much.”

Sales prices exceed comparables by $15-25k and about 16% above list price

Hack, who has been in the business for 10 years and whose team is ranked in the top 2.0 per cent in the world for Re/Max, says the strategy wouldn’t have worked until recently because the Edmonton market has been “buyer-centric for most of my career.”

By using list price as a marketing strategy, Hack says he’s seeing sales prices exceed comparables by $15,000 to $25,000 and an average 16 per cent over list price. 

The strategy works when inventory is low and prices are increasing, he says. According to Hack, prices in some areas of Edmonton are increasing by 2.0 to 3.0 per cent each month and inventory is at two months. 

The stats speak for themselves

The Realtors Association of Edmonton found overall July inventory in the Greater Edmonton area was tracking 15.1 per cent lower than July 2023. 

Meanwhile, total residential average prices were $435,094 in August 2024, a 9.1 per cent increase from August 2023. Overall, all residential listings averaged 35 days on the market, an 11-day decrease compared to the same period a year earlier.

Specifically ‘for a market rising out of the comparables, where each property selling is going to benchmark upward’

Despite a stronger market overall, the strategy does not work for certain areas of the city’s housing market, such as condominiums or luxury homes, Hack notes. “Using price as a marketing tool is like having a golf club for a specific shot. It’s specific for a market that is rising out of the comparables, where each property selling is going to benchmark upward.”

For a recent house sale that closed with comparables of about $365,000, Hack priced the property at $335,000. The property not only gained interest from people seeking properties for $325,000 to $335,000, but those looking for homes for $350,000, he explains.

It ended up having more than 80 weekend showings, 18 offers and then selling for more than $380,000 — well over the comparables. 

Teaching top agents throughout Canada a strategy clients are excited about

Hack has travelled to Toronto and Vancouver in the last six months to talk to top agents about how the strategy has evolved in those cities. As a result, “We get to use a well-defined playbook in a market where the majority of the agents are not this prepared.”

He notes the strategy is combined with other marketing tactics, such as doorknocking, “coming soon” notices akin to movie previews and “notables” — displays that draw attention to features in the home. The notables say catchy things like, “Your midsummer’s night sleep brought to you by central air conditioning” as house hunters approach the bedrooms. 

Clients are excited about the strategy. “It’s very easy to show them how it works and what it does,” Hack says. 

Toronto: Buyers ‘no longer willing to play the game’ except in select areas

Tom Storey, a realtor and team leader at The Storey Team and Royal LePage Signature, has been selling in Toronto for the last 10 years. He says market conditions in seven of those years were such that it made sense to list houses for lower than real value, with what he calls marketing or event pricing and limited offer dates. 

When inventories are low, “Buyers are willing to play the game because there aren’t tons of options.”

But in much of the Toronto market now, particularly condominiums, buyers are no longer willing to play that game. 

The strategy can still work, however, in high demand areas with limited supply of freehold properties between $999,000 and $1.5 million, such as Leslieville, The Beaches, High Park and Roncesvalles, Storey says.

He explains that in softer markets the only real answer is price if your property doesn’t have “a wow factor” (like a great view, location or school district) and is “cookie cutter.”

“If you want to get more traction on your property, you have to be better-priced than all the other options,” Storey adds.

Greater Vancouver: No more multiple offers so ‘be sharp on your price’

Realtor Scott Moe of the Moe Real Estate Team and Re/Max Treeland Realty in Langley, British Columbia, says the Greater Vancouver area is no longer one in which multiple offers can be expected, which was long the case.

He recalls, “In a hot market, we would price it lower than what we were expecting to get, set an offer date about a week later, show it all weekend,” and wait for multiple offers to come.

Now, the market in areas like Langley and Surrey is more balanced. “You don’t want to price it too high but if you price it too low and you want more than what you’re asking for, you’re probably going to get that lower price.”

Moe says in a normal market the main thing to be aware of is the price bracket you’re falling into, bearing in mind that for consumer real estate websites like Realtor.ca, buyers search within ranges of $50,000 for properties between $500,000 and $1 million.

“If you’ve got a townhouse that we think is worth $780,000 to $800,000, I would rather price it at $800,000,” Moe says. “Then, you’re in the $750,000 to $800,000 price bracket and the $800,000 to $850,000 price bracket on all of those websites. Even if you price it at $801,000, you’re going get so much less activity.”

The goal is to “Be sharp on your price. You don’t want to overprice it or you’re going to be sitting there.”