Pricing Your Home
The most important thing when you are selling your home is making sure that you get it on the market for the correct price. Anything too high, and Buyer's are going to walk away before they even look. Too low, and you risk losing money on the deal.
This is why hiring a Seller's Real Estate Agent is important!
What Impacts the Value of Your Home?
1) Neighbourhood Comparables
- By looking at what other homes in have sold for, you have an idea about what your neighbourhood is worth. The more recent the sales, the more accurate the value will be. It is also important to look for sales of homes that have similar features and distance from amenities.
- Even if your home is in an ideal location for you, it may not be an ideal location for future buyers. For this reason, appraisers will look at things such as the quality of local schools, employment opportunities in the area, and proximity to shopping, entertainment, and recreational centers. In addition to these, a location's proximity to highways, utility lines, and public transit can have an affect on home value.
3) Home size and usable space
- The value of a home is roughly estimated in price per square foot, but the price buyers will pay per square foot can vary greatly. For this reason, the amount of useable space is also important for determining value. Garages, attics, and unfinished basements are not usually counted.
4) Age and condition
- Generally newer homes appraise at a higher value. This is because the fact that critical parts of the house like plumbing, electrical, roof, and appliances are less likely to break down and can generate savings for the buyer. Buyers will pay more money to get a move-in ready home, as they do not typically want to deal with renovations when they first purchase. This is why most Buyer's will have an inspection condition in their contracts.
5) Upgrades and updates
- Updates can add value to your home, especially if your home is older and has outdated features. The impact of different projects varies depending on the market you're in and you're existing home value.
6) The local market
- If there are a lot of buyers in a market competing for fewer homes for sale, this is referred to as a Seller's market. On the other side, if there are few buyers but many homes on the market, it is referred to as a Buyer's market. When selling in a Seller's market, Buyer's will typically pay more so that they can get the house instead of it going to someone else. In a Buyer's market, typically prices will be sold for less, as the Seller wants to attract Buyer's to their home over other homes.
Professionals are Experienced
As you can see, there are a lot of different factors to determining what your home is worth. The amount of calculations could make your head start spinning. That is what a Real Estate agent is for. As professionals, they work daily in the market, so they know what homes are currently selling for. They are also experts in submarkets, knowing the difference between your home and the home in the next neighbourhood, even if they are the same models.
When you meet with a Realtor to talk about listing the home, they should bring research with them that outlines their recommended price. This research includes local comparables highlighting the differences between your home and the comparable homes, as well as whether that property sold, how much it sold for, and whether that amount was over, under, or at asking price. With all of this information, they will recommend a price that they believe your home will not only sell for, but will encourage multiple offers to get you the most amount of money possible.
Price Low- Sell High
Many Seller's will be tempted to put the maximum amount of cash they want to receive as the listing price. They get worried that if they price too low, they won't get what they are looking for.
Why is that problematic?
When you price your home too high, Buyer's will immeditately look at the price and decide to look at other homes instead. After all, if you want to buy a T.V. and you are looking at two similar brands with similar features, but one is $500 less than the other, you are more likely to want to save the money and get the cheaper T.V.
If you price your home slightly below market value, what ends up happening is a 'bidding war'. You will have multiple Buyer's wanting to get in on the amazing price. Buyer 1 might offer asking price, so Buyer 2 offers 2% above asking price. Buyer 1 still really wants your home, so they increase their offer to 4% above asking. This continues until someone decides that it has gone too high for them, and the highest bid wins.
As a real example, we recently listed a home for a good amount lower than what the Seller's wanted in their pockets. With less than 1 week on the market, we received multiple offers and ended up selling it for $51k ABOVE asking price, which was well above what the Seller's wanted to receive. Each time that we price homes lower, there ends up being multiple offers and our clients walk away happy with full pockets.
Don't leave anything to chance! Call Moe for a free home evaluation, and to see how he can help you get your home SOLD for the most amount of money possible.