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Determining the Best Asking Price. A realistic asking
price will help to sell your home quickly and for top dollar.
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By properly pricing your home you ensure that the gap between the asking and selling
price is small and that there will be a greater likelihood of competing offers.
Your home will also maintain its 'marketability' for a longer period of time before
people start to say... "That home has been for sale forever. What's wrong with it?"
A house that is priced 10% over its actual market value is many times less likely
to sell in the initial 30 days of marketing than one priced within 5% of its true
value. Not only will an over-priced home take longer to sell, it is also likely
to sell for less than it's actual value. This is due to the "discount" often associated
with properties that have been on the market for a longer than average time.
It should be pointed out that recommended listing prices are based on historical
sales and current market conditions. It is always difficult to walk the fine line
between getting the most for a property, while at the same time ensuring your asking
price is competitive enough to attract serious offers.
How you feel about testing the market will determine how much higher than the current
selling prices of similar properties you'll wish to ask for your home. You can always
start at a higher price than the market is currently bearing and then, if necessary,
reduce your price at a future date. The drawback to this is that it could take longer
than normal to sell and you could end up helping to sell other similar homes as
they may look comparably less expensive than yours.
This is where the experience and knowledge of a good realtor is invaluable. realtors
spend a lot of time and energy making sure they know their local market inside and
out. They keep their finger on the pulse of the market and have the resources, connections
and ability to keep you up-to-date with its constant changes. They know all of the
properties currently for sale in your area, and are literally your best resource
for determining and getting the highest price possible.
THE MAIN FACTORS THAT AFFECT MARKET VALUE
Location:
- • availability of community amenities, such as public transportation,
parks, stores, churches and schools
- • quality and consistency of neighbourhood planning
- • future development plans and local zoning
Property:
- • style, layout, size, age and quality of construction of
the building
- • size, shape, privacy and landscaping of the yard
Condition of the Home:
- • first appearances
- • floor layout
- • quality and appearance of fixtures
- • general overall condition of main systems (such as roof,
furnace, electrical system, central air, etc.)
Comparable Properties:
- • the asking and selling prices of comparable neighbouring
homes
- • the best way of establishing an accurate range of value
for your property is to have your realtor prepare a Comparative Market Analysis
(CMA); this will give you a detailed and accurate overview of the current market.
Market Conditions and the Economy:
- • number of homes currently on the market
- • number of people looking to buy
- • the state of the local and national economy
- • current mortgage rates
MARKET CONDITIONS AND THE VALUE OF YOUR HOME
No matter the condition or desirability of your home, its value will be affected
by current market conditions. Here are the various conditions you may encounter
and how they will affect you:
Balanced Market:
The number of homes on the market is equal to the number of buyers (supply equals
demand). In this market, prices are stable and homes sell within a reasonable period
of time. It is a calm atmosphere with buyers having a satisfactory number of homes
from which to choose.
Seller's Market:
The number of buyers exceeds the number of homes on the market (demand greater than
supply). In this market prices are increasing and homes sell quickly. As a seller
you will probably have more negotiating power and obtain a higher selling price
for your property. Unfortunately you will be on the other side of the fence when
purchasing your next home.
Buyer's Market:
The supply of homes exceeds the number of buyers (supply greater than demand). In
this market prices tend to drop and the homes stay on the market longer. Thus your
home may take longer to sell and you will have less negotiating power in terms of
the selling price. Fortunately you will be in the driver's seat when making an offer
on your next home.
IN SUMMARY
When you understand current market conditions, you are better able to position yourself
as a Seller. It helps to know if you are in a Seller's, Buyer's, or Balanced market
when setting your asking price. In a Seller's market, there is little competition
and you may ask for and achieve a slightly higher price than you anticipated. In
a Buyer's market there is a lot more competition and Buyers have plenty of choices
and room to negotiate, forcing you to be very competitive when setting your price.
In a Balanced market you will have a fair number of showings and sell in a reasonable
amount of time if properly priced.
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