We all love our homes and we are often emotionally invested in them. We have great memories and good times associated with our homes, which often makes the home worth more in our eyes.
But there is a big difference between the value that homeowners believe their home has, and the market value. Value can be defined by and calculated for residential properties by utilizing the direct comparison approach. When using this approach we compare the 5 major categories: Location, Square footage, Lot dimensions, Age of the property, Quality of finishings + Construction.
As an experienced realtor, I can tell you that you should NEVER overprice your home when listing it. Overpricing is dangerous as it could scare away potential buyers, and could make the home sit on the market for too long, which, in return, will make potential buyers think that there is something wrong with the house.
Many agents will agree to list someone’s home for too much to avoid a tough conversation with homeowners or to get the business. Once they do this, they’ll convince the owner to reduce the price of the home over time.
Pricing is as much an art, as it is a science. As a Realtor, I take great pride in making sure I help my clients find the perfect pricing and positioning within the market in order for them to achieve the highest market value.
If you are wondering what you should be listing your home for, I’ll be happy to help. My services are completely free of charge with no further obligations. Just let me know
It is essential that you price your home correctly based on the sold market comparable's in order to maximize your return on investment! We offer detailed analysis and a thorough understanding of the market.
Sometimes it's a beauty contest and price war, we have to find the balance. We can put it on at a price that helps others sell, or we can put on at a price that helps yours sell. We've seen the other homes, we can show them to you if you’re interested. I can’t stress this enough, marketing your home 10% above market value to leave room for negotiating never works out in the sellers favour!
Make sure you look at:
- Months of inventory =
- Stats - Buyer or sellers entire market vs your neighbourhood
- Are prices increasing or decreasing
Determining the right asking price is the most critical factor to the success of your home sale. As your chosen real estate professional, I will:
- Help you understand current market conditions and how they will impact your home's asking price.
- Prepare a market analysis to give you an appreciation of what comparable homes in your area have recently sold for.
- Assist you in understanding the marketability of your home's location, size, style and condition.
- Explain how pricing appropriate to market value will help make your home more marketable, exposing it to more qualified buyers while generating the best offers.
- Clarify the importance of capitalizing on the early activity associated with new listings by pricing your home appropriately when it first goes on the market.
- Help to create value and future negotiating power through chattel inclusions and exclusions.
- Work with you to develop a pricing strategy and determine an asking price that will sell your home in the shortest amount of time at the best possible price.
IMPROPER PRICING OF A PROPERTY:
Pricing at or near market value will always make a property easier to sell and within a shorter time. The fact that a house sells quickly does not mean that money has been left on the table if all the research has been done and the marketing has alerted potential Buyers to the property.
Speak to an agent who is honest when it comes to price. You do not want to pick someone who over promises a price and cannot deliver. What happens all too often is a homeowner will consider two or three agents. They likely select the agent who tells them that their home is worth the most, rather than the more accurate number. The home will sit for 3-6 months and that agent will likely try and have the homeowner reduce their price to re-stimulate the property. Given the reduction in price and staleness on the market, potential buyer clients are left in the drivers seat, and feel they have the upper hand in negotiating. I've seen this happen to often. Find an agent who gets REAL results.
Most of the time It’s a beauty contest and price war, we have to find the balance. We can put it on at a price that helps others sell, or we can put on at a price that helps yours sell.
Pricing Do’s and Dont’s
Are you familiar with the contrast principle? Bottom line: Don’t be the set up house!
No. 1: The real estate market is like the stock market
When sellers purchase their property in a heated market, it may be years before they can recoup their previous purchase price plus their cost of sale. Nevertheless, many still believe that when they list their home for sale, their price should be based upon their acquisition costs. This belief leads to extended listings, and frustrated sellers. THE MARKET DETERMINES THE PRICE, We analyze it to provide you with the right information to allow you to make the most informed decision
No. 2: Your house has to qualify
The house, not just the buyer, must qualify for the loan. When your home falls within the 80th percentile of GTA homes, your purchaser is more than likely going to be paying 20% down or less for the home. This being said the bank will only loan the purchaser the money if the valuation is correct or within the realm of correct. The purchaser may remove the home finance condition within the 5 day period, the bank may do the appraisal 2 weeks prior to closing, if they do not agree with the price the purchaser would be on the hook for the difference of what they paid and the banks appraisal amount. If they cannot come up with this money then the deal would default and your (homeseller’s) future plans would have a major wrench thrown in. Read more here: http://www.buschteam.ca/b/blog/recent-posts/what-if-the-bank-does-not-appraise-your-home-for-what-you-paid.html
No. 3: Are you in the X percent that will sell this month?
The rate of absorption (how quickly properties are turning over) or MONTHS of inventory, is pertinent to the success of your sale! If you want to sell in a given month, you must be in top tier of properties by both value and price in that location.
The bottom line is that you can ask for anything that you want for your house, it's your house! You can put it on the market and not take an offer if its not to your liking. We're here to help you price it for what the market will bear, and to create a stress free sale.
Pricing psychology and strategy
Think of when you go to the grocery store and you are looking at an item that is priced $3.99. Psychologically this is incrementally cheaper in the buyers mind than $4.19. Retailers know this and so do we. If we are giving you a range that your home is worth and that range happens to exceed an increment of $100,000 by $15,000 we would reccomend that you list using the 99 effect. I.e. if we appraise your home at $1,015,000. It's not to discredit your home or our evaluation, but to drive more interest as some buyers may only be approved for $1,000,000 and only look up to that value. Given how a lot of the Realtor and consumer search portals set up the increments of the values in the search (by $100,000) it may limit your buyer pool.
The Million dollar question. Blog
Would you rather have your buyers bid up your homes price, or negotiate down. Strategies will differ for different homes at different prices, however given our experience with the multiple offer strategy we do find it favourable for our sellers. Take away the downside risk and build in the upside potential. You get to pick your preferred closing date, and set the tone for offer expectations. It works. Most of the time the median is at market value range and there will always be a couple outliers, and thats where you benefit!
Were masters at it. See our process which sets the bar on expectations!
We do this a lot so trust our experience! What we find is that 30% will be at around the asking price. The next 30-40% will be at around market value based on the recent comparable sales. The last 30% will be at the top at a number we did not expect. These are the offers we then get to negotiate with to ensure max dollars
Were looking for your “A” buyers the buyers who are willing to offer you market value or slightly more, along with the closing date you are looking for in combination with no conditions, once weve been on the market for 2+ weeks were likely going to be seeing offers from your “B” buyers.
Getting a few opinions? Some agents will come in and give you the highest price, and tell you what you want to hear, setting false expectations, were honest and truthful. See what to look for in an agent here. Who you choose matters.
A few paramount considerations when looking at prices:
It is so important to capitalize on the early activity associated with new listings by pricing your home appropriately when it first goes on the market.
The “BUZZ” surrounding new listings posted for sale happens in the first 4-5 days
- Homes that have been sitting for 30 days, typically, are either cancelled and relisted or reduced.
- Evaluate Days on the market. Days on the market influences value.
Your earliest offers are generally your best offers
If you priced your home wrong at the beginning, and the listing is getting stale, adjust the price! ...and...if you believe that the listing price is low, you and I will know almost instantaneously. This is why we protect you with a 24-hour irrevocability on any offer that comes in, to ensure we're getting as much interest as possible and ensuring we're letting everybody to the table. The earlier the offers come in the more likelihood of them being close to asking price, or above. This is why listing on a Thursday or Friday is beneficial.
We have a rule in this market: whichever comes first, 21 days or 15 showings without an offer, we need a new pricing strategy. (this is for typical homes in typical markets, where the Days on Market average is (28-35 days)
Pricing at or near market value will always make a property easier to sell and within a shorter time. The fact that a house sells quickly does not mean that money has been left on the table, if all the research has been done and the marketing has alerted potential Buyers to the property it will get you the seller top dollar
Carefully consider months of inventory = Active Listings / sales (last month) ....This can mean it may take ____ months to sell…
A seller’s market territory is about 3.6 months of supply and under, while a buyer’s market is about 6.6 months of supply and up.
Also when the time comes to look at final calculations this is a good resource http://www.buschteam.ca/b/blog/sellers/calculating-your-net-proceeds.html