UNDERSTANDING HOW MARKET CONDITIONS WORK
The real estate market is changing all the time. It is critical to understand how market conditions can affect your position as a seller. As a real estate professional, I can provide you with current market conditions and explain their impact. It's the basic theory of supply and demand that affects real estate market.
1. Buyer's Market-when supply is greater than demand
The supply of homes exceeds the number of buyers. In this market, prices tend to drop and the homes stay on the market longer. Your home may take longer to sell and you will have less negotiating power in terms of the selling price.
2. Seller's Market-when demand is greater than supply
The number of buyers exceeds the number of homes on the market. 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.
3. Balanced Market-when supply equals demand
The number of homes on the market is equal to the number of buyers. In this market, prices are stable and homes sell within a reasonable period of time. It is a calm atmosphere with buyers having a number of homes to choose from. You can also get a reasonable selling price for your property as a seller.
TOP 5 MISTAKES WHEN PRICING YOUR HOME
1. Basing your price on another home’s asking price
Basing your home’s asking price on what the neighbor around the corner is asking can be a big mistake. Homeowners are able to ask whatever amount they want for their home. Your neighbor might be asking $100,000 more than they should. If you are basing your price on that amount, your chances to sell will be slim. You should be basing your price on what a similar home has recently SOLD for.
2. Basing your price on your recent renovations
If you bought your home 2 years ago and installed a new kitchen worth $50,000, that does not mean that you can ask $75,000 more for your home. Renovations do not return 100% of their value when you sell, especially if the renovation was specific to your taste.
3. Basing your price on how much money you need
This is a very common mistake. Many sellers have already bought a new home and they think 'I need to sell my home for X in order to pay for my new home' or perhaps a seller might not have a lot of equity in their home and they think 'I need to sell for X in order to make a profit on my home'. However, buyers are not concerned with the seller’s personal situation. Buyers only want to buy a home that is priced fairly, based on what other homes have sold for in the neighbourhood.
4. Basing your price on a different type of home or a home in a different location
If you own a semi-detached, you should not be comparing your home with a detached that sold around the corner. The expression is 'comparing apples with apples'. The same goes for the neighbourhood that you live in: You can’t compare your detached home with a detached home in a better neighbourhood.
5. Starting with a 'Let’s Try This' price
By far the most common mistake when homeowners already know what the fair market value is for their home, but they insist on starting at a higher price. Saying 'lets ask $25,000 more and see what happens' can be a big mistake. If you know the value of your home and you know how much money that you should realistically receive from the sale of your home, then you should price your home close to that price and expect to sell your home close to that price. By over pricing your home at the start of your sale, you eliminate many buyers who will see that your 'inflated price' is out of their budget, and they move on to another home.
CENTURY 21 Leading Edge Realty Inc., Brokerage*