“Everything sells as long as you price it right.” It may be a cliché, but it is true.
When you want to sell your home in Calgary, pricing your home is the most important factor. Sellers don’t always like to hear the truth about the sale value of their home. Here is what can happen if you decide to price it higher than the recommended sale price given by your realtor.
The recommended sale price of your home should be backed up by a full Comparative Market Analysis (CMA), which shows you the homes that sold recently in your neighborhood with the same characteristics as yours. Anything different to your home should be adjusted for a dollar amount. For example, your basement is developed so your home should sell for more than the home that sold with an undeveloped basement.
The CMA should also show those homes that expired, as these homes can show what do to differently.
Lastly, the CMA should show you the current homes for sale: your competition. What else can a buyer get for the same price in your area? At least those 3 subjects should be clearly laid out and explained by your realtor. Only then, you can come to a clear idea of the value of your home.
When we create a market evaluation for your home and explain it all to you at your kitchen table, we sometimes still run into misconceptions in regards to pricing a home. Here are some of those misconceptions.
1. “Let’s price it higher and see what happens first”
First of all, most activity takes place in the first few weeks. It is also statistically proven that this is when the best offers are made. So be careful not to have your home overpriced during the period with the highest activity.
Secondly, technology has changed the way people search. The internet searches homes with set parameters. If your home is priced higher (literally $1) than the price range it should be in, those home buyers who are qualified to search in that price range will not see your home.
Third, home buyers who do see your home may expect more for the money you are asking. The internet made most buyers very savvy and most buyers have been looking for some time via the internet.
2. “They can always make an offer”
Unfortunately, it does not work that way. This is Canada and we simply don’t like to offend sellers. Many buyers would see this as an insult and would rather not proceed with an offer, but rather look for a home that is priced right.
Now, we happen to be European and are a little ‘easier’ on offering lower. However, there must be a reasonable chance of being able to show that the price should be substantially lower. Also the factor motivation comes in play, and sometimes motivation wins and sometime motivation loses. But don’t expect buyers to make an offer on a home that is priced too high.
3. “But we put so much money into it”
Ask yourself the following question: if you would have known that you were going to list and sell your home in the near future, would you still have made these improvements?
Realistically, in the Calgary market there are only a few specific improvements that actually increase the market value of your home. Most improvements, however, are often personal and will not increase the value of your home.
4. “I need to get my cost out of it” or “We need the money”
Ask yourself the following question: would you pay more for a home to help the seller pay for their mortgage or pay-out penalty or credit cards? Value is determined not by what an owner needs, but by what buyers are willing to pay for the home.
5. “We can always come down”
True! You can always lower your selling price. But do realize that many buyers ask us: “How long has it been on the market?”
A property on the market for an extensive time combined with several price reductions reduces the buyer’s confidence in your home. “There must be something wrong with it” is a statement often heard. If your property goes market stale, then you decrease the chance of receiving an offer substantially.
6. “But the other realtor gives a higher sales price”
Don’t select a realtor based on the price they promise you. As explained earlier, there should be a conclusive CMA that supports the market value. There are plenty of realtors out there who take overpriced listings and count on their ability to ‘talk you down’ later.
Also, some realtors like to take an overpriced listing hoping this will bring other buyers or ‘leads’ they can convert to a transaction on another home.
Lastly about that ‘other realtor’, no home or condo is the same in Calgary. Even the so called ‘cookie-cutters’ have their differences. The realtor that comes in, looks around, sticks his finger in the air and gives you a number on the spot are extinct. That may have worked in the 1950’s and the 1960’s where you could choose between hardwood and carpet. Now we have the choice between 12 different kinds of flooring (in 50 different shades) and all have a different kind of perceived value.
7. “But my assessed value is higher (or lower)”
The City of Calgary has a different way of assessing the value of your home as well as a different reason to determine the value of your home. The City does not look at sale-ability. They don’t see the purple walls, bedrooms that are too small, frog-green carpet, scratched hardwood, the neighbour’s zoo or the terrible layout of your home.
Realtors will take many such items in consideration, knowing what the current buyer likes. Here is some more information on city assessments. Also the City of Calgary has a good website where they explain how they determine value.
In a nutshell, pricing your home right from the get-go gives you the most chance of getting the most out of the sale of your home. The first two weeks gives you the most showings, gives you the most chance to get in an offer, but also gives you to most chance to correct any pricing based on feedback you get from potential buyers that came through. Pricing a home is not science and nor is it one exact number. Your home should sell within a certain price range that is backed up by the extensive CMA offered by your realtor.
If you are thinking of selling you home and need to know the value of your home, ask us for a complimentary CMA. We also offer free market reports, showing the sold prices of homes in your neighbourhood.
To learn more, read about determining the best asking price for your home.