Pricing Your Home For Sale
Whether you are thinking of buying or selling a home with an extremely low inventory, you will need to pay attention to the value of comparables or how the list price of a home is calculated. Comparison properties are an indicator of fair market value.
Buyers and sellers are going to look at home prices differently. Obviously the seller is going to want to net as much as possible, the buyer is going to want a deal, and there is often a dance that happens during negotiations before a meeting of the minds is reached.
The housing market, like any other, is governed by the rule of supply and demand. When there is a low inventory of homes and a large demand then prices rise, and vice versa.
When you see a home come on the market at a price that does not make sense compared with other homes in the area or units in a building, then you immediately think the listing is overpriced. And often it is.
So in order to set the price of a listing by a buyer and to determine whether that price is at fair market value the respective agents are going to be looking at comparable sales. They will:
- Look up sales within the past three to six months in the same neighbourhood, if possible, and if not as close as possible to the subject property. If there have been no sales within that period or in that direct neighborhood, they will go back further or extend the area. This will be done using Multiple Listing Service sales data which is the most current and accurate.
- Compare the sold properties with the subject property (the listing).
- Amenities (pool, parking, etc.)
- Adjust the price of the comparable property according to the plusses and minuses of those homes compared with the subject property.
This is one of the reasons that looking on one of the big web portals for an estimate of prices will not provide you with an accurate reflection of the market. For that you need someone on the ground who has conducted an
in-depth analysis of like-for-like properties and can make the appropriate adjustments.
Pricing a home is an art these days. You may also see homes that seem to be listed way under market price. That is a tactic used to encourage multiple offers which bid the price of the home up. Putting a fair market value on the home is the best way to sell. The price is easy to check, buyers will not be able to argue with it, and the home will sell much faster for the listed price than an overpriced one which often ends up selling for less than the market price, because it has been languishing on the market.