So you’ve decided to sell your home, condo or perhaps it’s a vacant lot. As per my prior post, the #1 reason that properties sell or fail to attract a buyer is PRICE. Sure, we can debate the matter location, condition and the desirability of the neighbourhood etc. but at the end of the day these are all factors relative to price.
No matter how well maintained and up-to-date your home is or the fact it is in a great location, price is ultimately the most significant factor in securing a Buyer. Today’s Buyers are forever fearful of over-paying. Further, the Internet has enabled Buyers and Sellers to become very knowledgeable and informed. Via their online searching and comparative shopping, they get a good sense of values. They know which properties have been listed for an extended periods of time and they determine by looking at photos and virtual tours which ones are physically worth going to view.
I would hazard to guess that when most Sellers decide to sell and contact a REALTOR®, the scenario unfolds like this. The REALTOR® arrives at the property with little if any information to review with Mr. and Mrs. Seller other than perhaps a couple of MLS® data sheets for some other sales in the area. They take a tour of the home with the Sellers then sit down to discuss price. The REALTOR® will have a price in mind that they have arrived at based on the comparable MLS® sales they may have printed off in conjunction with their just completed tour. Mr. and Mrs. Seller will also have a price in mind. The Seller’s price will be based on the following:
- What they paid for the property plus any money they have since put into it.
- What they feel the home would cost to replace if you were to build it today.
- What they need to get out of the home in order to move on to the next home they wish to purchase.
- What their neighbours have told them their property is worth. This price is usually high as the neighbour is selfishly protecting their own interests and the perceived value or their property.
The fact is, none of the above matters and is of little consequence to a Buyer(s). The property is ultimately worth what a willing Buyer is prepared to pay. For the most part, the most they are willing to pay is an amount equivalent to what other comparable homes in the area have sold for. The REALTORS® job is to analyze the market, look at what has sold, what hasn't and also take a look at what is currently listed for sale as that is what the Seller(s) will be competing with.
In order to effectively do the necessary legwork to establish price, as a Market Value Appraiser I prefer the two stage listing approach. The first visit is to gather information about the subject property which can then be used to compare it to other recent sales in the area. Differences in lot size, location, the size of the house, number of bathrooms, features, finishes and other criteria all need to be reviewed, with dollar adjustments made for the many differences that are bound to exist. Only then can you arrive at a realistic selling and listing price. In some instances and this is especially true with higher end homes, they may be no good comparables. Nonetheless, conclusions can and still be drawn in order to arrive at a realistic price that will resonate with Buyers. This entire process takes some research and skill. It’s not a matter of pulling a number out the air so-to-speak or simply listing it for what the Sellers want. Doing so will probably result in the property being listed for an inordinately long length of time coupled with the need for multiple price reductions in order to secure a sale. When this scenario unfolds, the property may in all likelihood, sell for less money than it would have if priced correctly at the start.
If you are interviewing a REALTOR® with the intent of listing your property for sale, the onus is on the REALTOR® to provide you with the following information:
- A summary of other properties in the area that have sold?
- How do they compare to yours in terms of location, size, condition & features etc?
- How long did it take for these properties to sell?
- What was the listing versus sale prices for these properties?
- What other area properties are currently for sale that you will be competing with?
There are other questions to ask as well but I think you get my point. Selling your property is more than having a REALTOR® walk through and throwing out a price with nothing to substantiate it. Doing so will inevitably result in an unduly lengthy days on market, the need for multiple price increases and in the end, a sale price lower than what you mind have attained early on had the property been priced so as to be in the market versus just on the market.
Pricing a luxury or higher-end home is often a much different matter than what I have described above. Finding a comparable sale(s) to a $1 or $2 million plus property can be a challenge. If you are the owner(s) of a luxury, high end property I will in the next post on my luxury home blog “Southern Georgian Bay CarriageTrade Homes” talk about the process used to arrive at an appropriate price for that distinctive one-of-a-kind property.
One closing comment. Everyday I see REALTOR® ads offering "FREE Home Evaluations." With about 100,000 REALTORS® in Canada there are tens of thousands of "FREE Home Evaluations" being offered. As a seller, insist on obtaining one that is done thoroughly and professionally utilizing some of the guidelines I have explained above.