I am often asked by clients as I tour their home for the first time: “What is a comparable Windsor property?” At the risk of sounding like a broken record, this is why it is important to hire a knowledgeable and experienced real estate agent because finding the right price for your home takes some research. It’s not a lucky guess where you pull a price out of a hat. Therefore, you need an agent who knows your neighbourhood well and can provide you with what is selling in your area.
So how does the process work? All of the following help determine the listing price of your home:
A comparable property is a home with similar features such as size and condition as well as determining if the home is in a good location, with extras as mentioned above. Let’s say that you have a 2,500 square foot home in a nice area, close to good schools. An agent will look at other homes in the vicinity and see what they SOLD for, not the price listed. By comparing these similar homes to yours, you can get a good idea on what your property will go for.
In a buyer’s market, homes are usually priced competitively, because there are more homes, than buyers. In a seller’s market, prices are usually higher, because there is little inventory, but plenty of buyers. Today, we are seeing a balanced market in the Windsor Ontario area, which means that homes are priced for the most part, fairly, but selling much more quickly than they did a few years ago.
Now here’s the problem: Overpricing a home. There are those buyers that truly feel their home is way and above the competition, so they feel it should price accordingly. Well of course, this makes sense. But often, sellers are clouded by their emotions and believe their home is worth far more than the average home. And in a seller’s market, an overpriced home usually doesn’t scare many buyers, but today, an overpriced home may mean that your property may not even get looked at and will offend both buyers and realtors. So do you see why it’s important to price correctly?
What happens when a home is overpriced?
In a nutshell: usually nothing as the home will sit. The first month a home is listed, should be very busy with buyers walking through and hopefully making offers. But for those sellers who mistake the price of a home with the actual value of a property, they may see little to zero activity. Often clients will come to me and insist that their beautiful spa bathroom with expensive light fixtures, is a reason a house should be priced higher, because certainly they what they put into the remodel. But just because a seller wants this upgrade, doesn’t mean a buyer is willing to pay for it. This is worth repeating: Market value is not determined by a seller, but by the market.
Clues your home is overpriced:
1. It’s well above neighbouring properties: Again, you may have all the bells and whistles, but you won’t necessarily recoup all of your costs.
2. Have not received any offers in two months: The saying goes for some agents, that if a sellers hasn’t received one single offer and showings have slowed down considerably after just a few weeks, it’s time to adjust the price.
3. You hired a real estate agent who gave you the highest price for your property: If you interviewed several agents and the majority came in at around the same price, but one said your property is worth much, much more, realize that it may be too good to be true. Often agents will do or say anything to get your business, knowing quite well they can’t get the high price for your home.
4. No showings scheduled: Again, once your home hits the market, you should have several showings lined up almost immediately, especially in today’s market. But if there is little to no interest, it’s never too late to reduce the price.
5. Not all amenities are created equal: Again, you may have enjoyed the indoor basketball court in your basement, but for others, it may not hold the same appeal. Again, the more customized a home is for a particular family, the less likely buyers are willing to pay for the upgrades.