The golden rule: be objective
While your house is your home, it is important to put feelings aside and be as objective as possible. We know this is difficult because all sorts of feelings are attached to a property. Here's a tip: change roles. Imagine yourself in the buyer's shoes and be critical. See your property through your potential buyer's eyes
There are three important things to consider:
- A -The market conditions
- B - Your time constraints
- C - The lowest selling price you are willing to accept
A – Market conditions
The law of supply and demand applies: your property is worth what buyers are willing to pay for it. To get an idea of this price, we suggest you consult what in real estate jargon is called comparables. Comparables is what similar properties to yours recently sold for in your neighbourhood.
Chartered appraisers also consult comparables to determine the market value of properties. You can consult with an appraisers to obtain a report to validate your selling price.
Once you have this information, objectively identify similarities and differences, such as location, living space, the number of bedrooms, bathrooms, the year your home was built, the exterior facing, the size of the lot, whether or not there is a garage, a pool or a fireplace, any renovations done and so on
If in the last year, neighbouring properties similar to yours sold for $310,000 to $320,000, you should expect your property to sell in that price range. The other factor to consider in estimating the price is how quickly you want to sell.
Other sources of information are also available
B – Your time constraints
You also have to take into account how much time you have to close the sale. If you need to sell quickly, the right price would be closer to $310,000 than $320,000. On the other hand, if time isn't a factor and a higher price is justified, waiting to get your price is the right decision. Find your comfort zone. For example, $315,000 could be the right price for you, once everything else is taken into consideration.
A word to the wise: For understandable emotional reasons, it's human to overestimate the value of our property. Asking too much at the beginning could delay the sale. Your property risks getting the reputation of being a ''problem house'', and buyers will mistakenly believe that it isn't selling for some valid reason and will avoid it. Even if you drop the price, you may not be able to get rid of the mistaken perception that this is a ''problem house'', and potential buyers will be hesitant; you'll have to drop your price again.
C – Your bottom line
Once you have determined the selling price, you have to determine whether the amount remaining after you have paid all the costs of the transaction is acceptable to you. These costs vary from transaction to transaction and include:
- The mortgage. Find out about terms from your lender.
- Notary fees. Contact the notary to find out about fees.
- Advertising costs. While advertising on ComFree is included in your fees, you may want to spread the word in other media, too.
If after doing the exercise you find the amount that remains unacceptable and you're not forced to sell right away, it's better to wait until market conditions are in your favour. Markets are cyclical. A buyers? market follows a sellers? market and so on.About leeway
According to CMHC reports for 2008, the gap between the asking price and the selling price is normally between 4% and 8%, rarely more. However, in areas where there is heavy demand, the gap tends to shrink and even disappear.