Posted on
September 3, 2012
by
Alisa Sakamoto
The Best Asking Price for
your Home
Setting a realistic price for your home
that reflects current market values will help sell your home quickly and for
top dollar. When you price your home
properly, you increase the chances that the offer you receive will nearly match
your asking price, and that there will be competing offers—which may net you
even more in the long run.
Your property has the best chance of
selling within its first seven weeks on the market. And, studies indicate that the longer a property
stays on the market, the less it will ultimately sell for. A property priced 10 % more than its market
value is significantly less likely to sell within this window than a property
priced close to its actual market value.
About three-quarters of homes on the market today are 5-10 %
overpriced. Sellers will usually over-price
their homes by this margin if, either, they firmly believe the home is worth
more than what the market indicates, or if they want to leave room for
negotiation. Either way, if you choose
to over-price your home by this amount, you run the risk of increasing the
amount of time your home spends on the market, and decreasing the amount of
money you’ll ultimately receive.
At the other end of the selling spectrum
are houses that are priced below a fair market value. Under-pricing often occurs when the owner is
interested in a quick sell. You can
bargain on these homes attracting multiple offers and ultimately selling
quickly at—or above—the asking price.
The knowledge and skills of an experienced
Realtor will be invaluable when determining an appropriate asking price. It is the job of your Realtor to know the
current market and market trends inside and out, to be closely connected to the
real estate market at large, and to be aware of other properties currently for
sale in your particular area. Based on
this range of connections and knowledge, your Realtor should counsel you on how
to price your home properly in order to attract the highest price possible, in
the shortest period of time.
Before approaching this process, you should
first do some homework yourself. You’ll
need to know the workings of the current market before you even begin to think
about setting an asking price. The
market will always influence a property’s value, regardless of the state of a
home, or its desirability. Here are the
types of market conditions and how they may affect you:
- Seller’s Market:
A Seller’s
market is considered a “hot” market.
This type of market is created when demand is greater than supply—that
is, when the number of Buyers exceeds the number of homes on the market. As a result, these homes usually sell very
quickly, and there are often multiple offers.
Many homes will sell above the asking price.
- Buyer’s Market:
A Buyer’s market
is a slower market. This type of market
occurs when supply is greater than demand, the number of homes exceeding the
number of Buyers. Properties are more
likely to stay on the market for a longer period of time. Fewer offers will come in, and with less
frequency. Prices may even decline
during this period. Buyers will have
more selection and flexibility in terms of negotiating toward a lower
price. Even if your initial offered
price is too low, Sellers will be more likely to come back with a counter-offer.
- Balanced Market:
In a balanced
market, supply equals demand, the number of homes on the market roughly equal
to the number of Buyers. When a market
is balanced there aren’t any concrete rules guiding whether a Buyer should make
an offer at the higher end of his/her range, or the lower end. Prices will be stable, and homes will sell
within a reasonable period of time. Buyers
will have a decent number of homes to choose from, so Sellers may encounter
some competition for offers on their home, or none at all.
Remember, a Realtor
is trained to provide clients with this information about the market, helping
you make the most informed decision possible.
The right Realtor will guide you through the ups and downs of the market
and keep you up-to-date with the types of changes you might expect.
Evaluate your
house in the other main areas that affect market value:
- Location:
The proximity of
your home to amenities, such as schools, parks, public transportation, and
stores will affect its status on the market.
Also, the quality of neighbourhood planning, and future plans for
development and zoning will influence a home’s current market value, as well as
the ways in which this value might change.
- Property:
The age, size,
layout, style, and quality of construction of your house will all affect the property’s
market value, as well as the size, shape, seclusion and landscaping of the
yard.
- Condition of the
Home:
This includes
the general condition of your home’s main systems, such as the furnace, central
air, electrical system, etc., as well as the appearance and condition of the
fixtures, the floor plan of the house, and its first appearances.
- Comparable
Properties:
Ask your Realtor
to prepare you a general market analysis of your neighbourhood, so you can
determine a range of value for your property.
A market analysis will provide you with a market overview and give you a
glimpse at what other similar properties have been selling for in the area.
- Market Conditions/
Economy:
The market value of your home is additionally affected by the number
of homes currently on the market, the number of people looking to buy property,
current mortgage rates, and the condition of the national and local economy.
