What value should you list your property for?

One of the most important aspects of selling a property is to determine the listing price.  Not only does it require a fair appraisal of a property’s market value, but also how long the property should be kept on the market to achieve its listing price. A property is rarely listed below market value but properties are often on the market for an exceptionally long time, usually because the price is too high. So what is the balance between listing price and time that it takes to sell the property?

The immediate observation is that a property listed above market value generally takes longer to sell.
 
The figure below shows the average percentage difference between the listing price and the property transaction price for four property value segments over the past six years. When looking at the third quarter of 2012, mid value properties were, on average, listed 3.2% above the actual transaction value whereas super luxury properties were listed roughly 11% above the transaction value.
 
Another interesting observation is that the higher the value of the property, the higher the average difference between the listing price and the transaction price. It seems that owners of more expensive properties tend to list their properties for relativity higher market-related values compared to more affordable properties. If the listing price increases to between 6% and 15%, the average time on market increases to between 5.9 and 6.5 months.
 
In essence, this analysis has established that listing a property at prices significantly higher than the fair value may lead to higher waiting periods from the listing date to transaction date. It should be cautioned not to list properties for much higher than fair value since it could significantly increase the time needed to sell the property.