When selling your home, determining the price you and your De Laat realtor agree on and will be listing – otherwise known as the “asking price” – is arguably the most important part of the selling process.
Once your home is listed, the first couple weeks are critical for generating public interest. Setting the price of the home too high or too low can lead to fewer offers, or offers much lower than what you hoped for. If you have not set the price high enough, you could miss out on the opportunity to make more money for your home. It may even deter potential buyers from viewing the property altogether, as a lower price may lead to the assumption that there’s an issue with the home or property.
If you set the asking price too high, your home could be easily skipped over in favour of those within a more reasonable price range. It is common for prospective buyers to become discouraged and assume a lower offer won’t be accepted, so they don’t bother making one. Sometimes they may even feel embarrassed to make an offer much lower than the asking price, and they move on.
When a home is priced too high, it could end up being on the market for longer than you had hoped, leaving you with less leverage with each passing week. In negotiations, prospective buyers may think that you are getting nervous or desperate and will present offers much lower than you had hoped. If you then lower your asking price, you may end up selling it for less than you would have if it had been priced properly in the first place.
To avoid these potential pitfalls, it is important to set your asking price not too high nor too low from the onset. Finding the best asking price involves an extensive understanding of the local housing market and an objective opinion of your home’s marketability. The De Laat Team is highly experienced in researching all available information and guiding you through the process, so you can sell your home quickly and for a great price.
What is “Market Value?”
A home has several different values, depending on the purpose of the evaluation. Insurance companies, for example, estimate the “replacement value” of a home in the event of a fire or other disaster causing devastating damage. This is the amount it would cost to rebuild the home as it was, and usually does not include the value of the land itself.
A financial institution will commonly be interested in the “lending value” of a home, which is determined by a professional appraiser. This represents the amount a lender could expect to receive in the event of a mortgage default and subsequent liquidation of the property. Unsurprisingly, the estimate of the lending value is usually a pretty conservative one.
When selling a home, most sellers set an asking price based on the home’s estimated “market value.” This is the highest amount the property will fetch in an open and competitive market, along with additional factors that are important for a fair sale. These factors apply to both the buyer and seller, and typically include: both are aware of the availability of market information and other options, both are rational and well-informed, and neither side is being pressured or forced.
The market value is the amount that a home should sell for, given it is put on the market for an appropriate length of time and is properly advertised. The De Laat Team of Niagara is highly knowledgeable and can expertly calculate your home’s market value and help you find that perfect asking price that meets your needs.
Calculating a Home’s Market Value
All members of the De Laat Team are very knowledgeable of political, social, and economic factors that may influence the market value of homes in your neighbourhood. For example, a new manufacturing plant in your community will likely lead to a greater housing demand, which will increase market prices. If there is a trend of older couples moving into the neighbourhood, it will make two bedroom bungalows more desireable than three or four bedroom homes with large properties.
Taking these outside factors into account, the most significant part of the story is your property. The most important influencers of market price are the building and lot size, the construction materials used, condition of the property and buildings, the specific location, and the prices of recently sold homes in the area.
The De Laat Team will thoroughly assess these factors through a process called Comparative Market Analysis, or CMA. By using available information through the Multiple Listings Service (MLS) and their collection of records, they will compare your home to similar homes that are on the market or have recently sold.
More often than not, the comparative homes are not identical to your home, so this is always taken into account. If one home has a professionally finished basement or an additional room added and the other does not, the market price will need to be adjusted.
It makes sense that the fewer the adjustments, the better the comparison will be. Having a bunch of similar homes sold in the area, and more recently, will provide accurate information that your De Laat realtor can use. We are experts in finding these homes and providing the best possible comparisons available. Once these comparable homes are found, your agent will analyze this information to determine your home’s optimal market price. We will provide as much guidance through the process as you need to ensure you find a market price that matches the home’s value.
Deciding on the Market Price
It is important to keep in mind that even with a knowledgeable and experienced member of the De Laat Team in your corner, their estimate is an informed opinion, not a scientific formula. More often than not, they will communicate with other knowledgeable De Laat realtors to get a variety of opinions and feedback about your home’s value in the area’s current market.
The price that is agreed upon for the Listing Agreement is primarily based on the market value, but there are other influencing factors. A market that is getting stronger, for example, will work in your favour, while a weakening market will not. Are interest rates rising or falling? Are there similar homes in the area competing with yours? And if so, how many are currently on the market? Are people worried about their job security, or are buyers financially comfortable and confident? Most importantly, what is it that you care most about? Selling quickly, or getting the most money for your home?
The De Laat Team of Niagara is extremely proficient in considering these factors and more than happy to discuss them with you. When you’re thinking it over, remember that nothing can replicate the initial rush of interest and activity once your home is listed. As soon as it hits the market, other realtors will want to give it a look and determine whether or not it would be of interest to their current clients. Once a lawn sign is installed and a listing is made public, it will typically generate a lot of interest. This makes it absolutely crucial that you establish an accurate asking price that can best take advantage of this initial market activity.