BY RON BARLAY
The correct selling price for your home is the highest price the market will bear. As a real estate professional for more than twenty five years, I have had ample experience helping clients sell their homes quickly and for the best possible price. This article reviews some valuable information that is used when determining a home’s correct selling price. Specifically, there are three factors that help determine the correct selling price of a home: homes that have sold in the last six months, homes that are for sale now and listings that have expired in the past twelve months.
Sold in the Past Six Months: The final selling prices of similar homes recently purchased in the neighbourhood are the best indicators of how much buyers are prepared to spend for comparable homes in current market conditions in your area. This analysis of comparable homes in the neighbourhood is an important guideline because it tells us: what homes were on the market, at what price they sold, for how many days they were on the market and what they actually sold for.
For Sale Now: Your competition comes from similar homes currently on the market. The competition includes both new and resale homes. This analysis of comparable homes gives us a clear picture of the competition. If the home down the street with the same floor space and the same number of bedrooms and in the same condition as your home is listed at $650,000 it is unrealistic to imagine that a buyer will spend $700,000 for your home. If you were the buyer, would you? This analysis shows us: what homes are on the market, at what prices, how many days the homes have been listed, what the original asking price was.
Expired in the Past Twelve Months: Expired listings provide valuable information on what price ranges did not work. In many cases, listings expire and the home is taken off the market because the price was set too high. An analysis of expired listings is an analysis of what price ranges did not work for comparable homes in the neighbourhood. This analysis shows us: what homes did not sell, what price did not work, for how many days they were on the market.
What happens when a home is priced above its true market value? Most owners believe that their house is special and that its market value is higher than it really is. This is a normal reaction. We become familiar with our home and our neighbourhood. We hear stories about how much someone else sold their home for.
Some real estate sales representatives will accept a listing at what they know is an unrealistic price just to get the listing. But what happens when a home is placed on the market at a price well above its true market value? Usually, there is less activity than there should be and very few reasonable offers. The listing agent will then suggests a price reduction which the vendor will be forced to accept very reluctantly. The vendor’s heart was set on the higher price and they were already planning how they were going to invest the proceeds. Now the For Sale sign says, “Price just reduced.” As a buyer, doesn’t this make you wonder what’s wrong with the property? If there are still no reasonable offers, the agent may recommend one more price reduction, “to adjust for today’s tough market.” Now that the house is priced correctly, the vendor still faces another serious problem. Real estate sales representatives question why the house was on the market for so long and why it had so many price reductions. They assume that something must be wrong with the property and it does not get the attention or the showings that it deserves. At some point, a buyer offers a price well below the market value of the home. The buyer knows that the home has been listed for a long time with several price reductions. The buyer uses this information to justify the lower price. By this point, the vendor may be so discouraged with the process that they accept the offer.
This analysis reveals how important it is to correctly price your home for sale. To arrive at the correct selling price of your home, Team McDadi will provide you with a comprehensive market analysis of comparable properties that have recently been sold and properties that are currently listed for sale. With more than twenty five years of experience selling homes across the Greater Toronto Area, Sam McDadi understands how to price your home properly so it sells for the best price. Call 905-502-1500 for more information and a free home evaluation.
