There are many different reasons why many Sellers have a fixed idea of how much their home is worth. I will discuss some of the major senarios.
- A young couple have been living in their downtown Toronto Home for the past 12 years and are ready to move. The surrounding homes are larger with parking, and are higher priced, but our sellers expect the same price, even though their home only has two bedrooms and no parking.
- Lis and Bob have a Daughter who's about to Graduate from High School. She wants to attend a University in another Province. Lisa and Bob need to sell their home for more than Market Value so they can send her off to Univeristy with the profits.
- On another listing appointment our Sellers bought their home in a Sellers Market, outbidding five other buyers. Recent indicators suggest their home hasn't appreciated because the market has changed, but our Sellers insist on getting more than what they paid for it.
- In another appointment our Sellers have lived in their home for 45 years, and over all these years they have not kept up with repairs and maintenance and the home has fallen into disrepair. Our Sellers have willed their home to their children. The children the inheritors are not willing to put any money into improving the house; they wish to sell it for top dollar and split the proceeds immediately.
Many times we encounter these scenarios when our clients wish to sell their homes. My team and I can still assist all of these people with realistic advice and cutting edge market exposure, the commonality in the above scenarios is that they all insist on achieving a certain price for their home. A rigid atitude on price will probably, in the long run cost a lot of time and money. It is normal to think your home is worth a lot and to want to get the best possible price ofr it. You may have to put a lot of work into it, the neighbourhood may be excellent, and you may hope buyers will fall in love with the whole package and pay top dollar for it.
Some Realtors will agree to the Sellers pricing goals whether it is achievable or not. The Realtor will suggest a price, but will adjust the price to the Sellers wishes. They will sign a listing agreement with you and put your home on the market for the price the Seller asked for, knowing full well that the market won't bear that price. The home will sit on the market, hoping you will agree to lower the price in the future or accept a lower offer out of desperation. We will not do that, this is not in the best interest of the Selle, it only helps the competition, not you.
The market sets the price, not wishful thinking or any other factors. It is a simple law of supply and demand. Here are all the things that have no actual impact on market value:
- How much you need to purchase your next home.
- How much you paid
- How much you spent on improvements (we will consider the improvements themselves and how much value they bring, not the dollar value you're tyring to recoup)
- The value of a similar home in a different area
- The cost to build the same home today
Our duty to our clients is to set a realistic price to match market conditions so your home sells quickly for the best possible price. My expertise is in the comprehensive analysis of comparable homes that have recently sold in your neighbourhood, keeping in mind your home's unique features. This is called a Comparative Market Analysis and it is gerally considered the most effective method of determining a price for your home. The CMA is divided into three categories:
- Similar properties that have recently SOLD
- Similar properties that have currently been LISTED
- EXPIRED LISTINGS could be as a result of overpricing or other factors like location, layout, poor marketing.
In addition to the CMA, We will help you develop a competitive price based on other key factors. If there aren't exact comparables for y our home, we will add or subtract for variables such as the following: Location - Size - Style - Condition - Community amenities - Financing options (Vendor Take Back mortgage?) - Market conditions (Is it a buyer's or a seller's market)
Why is listing your property at market value so essential?
Buyers do not bother looking at over-priced homes, or under-priced ones either! Most buyers working with a Realtors receive property listings from their Realtor via e-mail. Their Realtor is only searching for them within the parameters of their needs. If the buyer's budget for a home is $600,000, they are not looking at homes either for $800,000 or $400,000.
If your home sits on the market too long it will loose it's marketability. Even if there is nothing wrong with your home, other than an unrealistic price, it will develop a stigma. Buyers will forget about the overpriced home, Realtors will see the DOM (days on market) and wonder what's wrong with the property and why it hasn't sold.
Offers are higher when a proerty is closer to market value. Your are getting educated buyers and will know that your home offers good value based on what else is out there. You will attract more interest on your home if it's priced right.