The Asking Price
Deciding what price tag to put on your home or cottage is never easy. Price is often the determining factor for potential buyers. Location, layout and amenities are important but in the end, most of us have to look at the bottom line. Many sellers like to think they can start with the price they originally paid, add a healthy mark-up and wait for the offers to roll in. A lot of those sellers will have to adjust their price once their home is on the market. As your Real Estate Sales Representative, establishing your asking price is part of my job!
Try to put your emotions aside – the cherished memories you may hold of your home are basically unimportant to buyers. Usually, they’re more interested in creating their own memories. An unsentimental look at the market value of your home can save time and disappointment.
AMOUNT PUT IN DOESN’T ALWAYS EQUAL AMOUNT PAID OUT
The amount you actually spent for home or cottage upgrades is worth mentioning in the listing information, but their reflection in the selling price can be somewhat distorted. The new carpet, paint, or deck you added may increase the value (and shorten the time your home is for sale) but don’t expect to be reimbursed dollar for dollar for those renovations. As design trends change you may also find that certain renovations are either more or less desirable.
ARRANGE A COMPARATIVE MARKET ANALYSIS (CMA)
It is standard practice for a seller to ask real estate agents to visit and evaluate their home. Ask for a comparative market analysis showing the selling prices of similar homes in the neighbourhood, those currently on the market and those that didn’t sell. A CMA presented by an experienced agent can provide a realistic price estimate of your home. Remember however that CMAs are not set in stone. Some agents under-value your home in hopes of creating demand. Others will flatter you with over-inflated estimates in order to get your listing but later suggest a price reduction. You may want to get a number of CMAs and augment it with your own investigative work.
CONDUCT YOUR OWN MARKET RESEARCH
When homes and cottages in your area have open houses take a look. Use this opportunity to compare your home to “the competition” in terms of price, location, square footage, and amenities. Once you look at several listings you should be able to make an educated guess as to the market value of different aspects of your home. If you are months away from actually listing your home, visiting open houses may also help you discover which renovations could be profitable and appeal to today’s consumers.
CONSIDER MARKET CONDITIONS
Today’s market is HOT! Real estate is one of the most secure investments you can make, however, prices can rise and fall independent of the quality of the individual properties. If you attempt to sell your home or cottage when the market dips you’ll find you may have to lower the price below your expectations. Interest rates, the state of the economy and the local job market should be considered before you put your home on the market. The time between price peaks varies due to local and national market influences. These characteristics will assist you in determining if there are any market timing opportunities.
Finally, consider your own needs when setting your price. Are you in a hurry to sell? If so, you may want to knock one or two percent off the market value. Is there a minimum amount you can afford to accept? If you have the luxury of time you have more leverage. Keep in mind, however, that a house or cottage that is on the market too long or has a large price reduction at some point, may be viewed as “damaged” or “stale goods”. Your best strategy may be to establish a fair asking price from the start. Most buyers will make an offer lower than the listed price in a bid to see how low you’ll go. However, those who have researched the market will be willing to meet you near your terms.
For more information about establishing your asking price in today’s HOT market, please contact Todd Sayles at BALL Real Estate Inc., Brokerage.