In this series of articles, we are devoting the month of December to resolutions you should keep if you are buying or selling a Windsor home in 2013. Yesterday, we discussed that the first order of business should be to hire a professional real estate agent. Today, on this second day, it’s important to talk about pricing and budgets. The goal is to make sure you, whether you are buying or selling, to get the best possible deal available and this should be clearly outlined at the start of your real estate journey.
For sellers, pricing their home correctly from the very beginning can be the difference of a home selling right away or languishing on the market. Why?
A home is only worth what a buyer is willing to pay and a seller willing to accept. Some of the most common mistakes sellers makes are the following:
Price Based On What You Need:
What you need to make to sell your home to pay off the bank, retire or buy a new property makes no difference to the seller.
Priced Based On What You Think Your Home Is Worth:
Even if your neighbour is selling their similar home for 250k, and you offer yours for 300k simply because you feel your home is better, won’t help you sell your home. Almost everyone thinks there property is the best on the block, yet it doesn’t matter what you think, it matters what the buyer thinks. A house that is marked up significantly from others in the neighbourhood doesn’t get the buyers.
Priced Based On Greed:
Simply pricing your home just to see if you can get more than it is worth is not likely to win you any buyers as well. Once buyers and real estate agents realize your price is unreasonable and unrealistic means showings will come to a standstill. Not only that, if you lower the price, but still not near the correct price point, your home will have been on the market too long and buyers will think something is wrong with it.
So a home must be priced correctly once the listing hits the market. How is this done? Your real estate agent will research the neighbourhood homes that are for sale that are similar to yours in size, location, age and condition. There is not a magic formula that an agent enters into their calculator to receive the exact price for your home. But rather, using a Competitive Market Analysis (CMA), an agent can determine a good price point.
Buyers – Start A Budget And Get Pre-Approved:
If you are planning to buy a home in 2013, one of the very first things you need to do when looking for a home is to set a budget and get pre-approved for a home mortgage. There are several reasons why as it is simply a smart strategy that can speed up your home buying process and give you an edge on the competition.
1. You Know What You Can Afford:
With a pre-approval letter, buyers will know exactly what they can afford. In a way, it’s like shopping with cash because you and your real estate agent can be reasonably confident that the money will be available when you find a home in your price range.
2. Pre-approved Buyers Have Advantage:
When a buyer makes an offer on a home, and the seller is entertaining several bids, there is a very good chance they will lean towards the person that has a pre-approval letter. Not only that, it’s often a great negotiating tool for your real estate agent when presenting your offer. Sellers want to know that a buyer is qualified and that they shouldn’t expect any issues with financing. Almost always, sellers go with a sure thing as opposed to accepting an offer from a buyer who has no proof they can even afford the home.
Once you have that pre-approval letter, make a list of what you want in a home. Write down all of the “must-haves,” you desire, and then finish with items that you would like, but don’t necessarily need to have. What is important is for a buyer to consider location, commute, style of home and neighbourhood. For example:
- Age: Do you want an older home? New construction?
- Style: Do you want a traditional home, ranch, bungalow?
- Bedrooms: How many?
- Bathrooms: How many?
- Floor plan: Open? Formal layout?
- Stories: How many?
- Square Feet: How much space do you need?
- Kitchen: How big? Updated? Open to living areas?
- Storage: How much do you require? Garage? Shed?
- Extras: Finished basement? Attic?
Amenities: What do you need for your future home?
- Guest bedroom
- Outdoor living area
- Family neighbourhood?
- Land, wooded lot
These are just a few examples of what you should ask yourself before buying a home. For those that don’t know what they want, it can take that much longer to find a home. Be upfront with your real estate agent or don’t hesitate to ask questions and seek their advice. They can often sit down with you and see what type of home fits your lifestyle.