PRICING YOUR HOME TO SELL
VALUE TRENDS IN THE MARKET
Prices in the real estate market rise and fall over time. A rising market may 'catch' the home and it will sell. However, in a flat or declining market, pricing is far more critical since the market won't catch the price within a reasonable time. Consult with your agent to learn the current market trend when making your pricing decision.
REGRESSION & PROGRESSION
Surrounding property values influence the value of your home.
PRINCIPLE OF SUBSTITUTION
Value is determined by what a purchaser gets OUT of a product...Not what an owner has IN it.
HISTORY OF AN OVERPRICED HOME
By the time an overpriced home is finally reduced to the market it may be too "aged" for buyers to offer full price. Have you ever asked how long a home has been on the market? What conclusion do you draw?
'BUT WE HAVE TIME"
At some percentage over market, no reasonable amount of time will produce a sale. Even when priced right at the market it may require a month of exposure to sell.
REASONS FOR OVERPRICING
- Over Improvement - Improvements should be made for enjoyment, not just resale. You cannot add an item to a home, select it to your style, use it, then expect a buyer to pay the original cost.
- Need - An owner's need for money does not increase the value of the home.
- Buying in higher priced area - Values are location specific. High values in the destination do not increase the value of the existing home.
- Original purchase price high - Chances are you paid market value. It's not a price that was too high, but a market that has experienced subsequent change.
- Lack factual data - Base your opinion of value on recent documented sale prices.
- Bargaining room - Buyers may offer low but they will do that at ANY price. It is easier to negotiate up to fair market value than to an inflated price.
- Move isn't necessary - Even if the move isn't urgent, it is important to price correctly to preserve your marketing opportunities when the move becomes urgent.
- Corporate Buyout - Third party companies purchase thousands of homes a year so the offer you receive is usually market value. Market your home very close to that price.
COULDN'T WE TRY FOR A COUPLE OF WEEKS?
The majority of prospect activity on a new listing occurs in the early period of marketing. This happens because agents maintain an inventory of active prospects that have been cultivated over time. When a house is newly listed, agents arrange for them to see it. Once this active group has seen the property, showing activity decreases to only those buyers new to the market. For this reason it is important that sellers have their home in the best condition and at the best price at first exposure to the market.
BENEFITS TO PROPER PRICING
- Faster Sale - when your home sells faster, you save carrying costs, mortgage payments and other ownership costs.
- Less inconvenience - if you've moved before, you know the energy it takes to prepare for showings, keep the home clean, make child care arrangements and alter your lifestyle. Proper pricing reduces this.
- Exposure to more prospects - at market value, you open your home up to more people who can afford the price.
- Increased Salesperson response - when salespeople are excited about a home and its price, they make special efforts to contact all their potential buyers.
- Better response from advertising and sign calls - ad calls and sign calls to agents turn into showings when price is not a deterrent.
- Attracts higher offers - when a home is priced right, buyers are less likley to offer low out of fear of losing a good home.
- Means MORE money to sellers - if a home is priced right, the excitement of the market produces higher sale prices. You NET more both in terms of actual sale price and less carrying costs.
QUESTIONS TO HELP YOU ANALYZE YOUR PRICING STRATEGY:
Am I selecting an agent based on services or price?
Is the local market rising, falling or staying even?
Is my opinion of the value based on the actual neighbourhood sales?
How many homes in this area are competing against mine right now? How does mine compare?
Have any neighbouring homes been on the market too long? Why?
Is my home consistent with, larger or smaller than the surrounding area homes?
Which improvements have I made since purchase that will actually increase value? Which improvements won't?
Are my financial needs influencing my asking price?
Is my original purchase price influencing my asking price?
Am I willing to price right and stand firm?
Are the benefits of moving important enough to price my home at the market?
PREPARING YOUR HOME FOR SHOWING
People buy what they see so always try to look at your home through the potential buyer's eyes. You don't get a second chance to make a good first impression. Here are some things that you can do to give your property an edge over the others competing with yours for the market's attention.
- lawn cut
- hedges and shrubs trimmed
- gardens weeded and edged
- litter picked up
- drive and walkway in good repair and clear of snow, leaves, toys, etc
- eaves troughs and soffits in good repair
- garage cleaned out
- touch up painting, if required
- shingles and flashing in good repair
- house number easy to read
- doorbell working
- door hardware in good condition
- porch and foyer clean and tidy
- boot tray inside front door
- fresh air in the house
GIVE IMPRESSION OF SPACE
- clean halls and stairs of clutter
- store surplus furniture
- all countertops free of unnecessary items
- clear away all books, magazines, toys and unnecessary objects
- store seasonal clothing
- closets neat and tidy
GIVE IMPRESSION OF GOOD MAINTENANCE
- repair leaky taps and toilets
- tighten door knobs and cupboard latches and oil squeaky hinges
- repair any broken or cracked windows
- repair any minor flaws
- replace burned out light bulbs
- clean furnace and humidifier
- caulk and grout tile around bathtubs and showers
GIVE IMPRESSION OF CLEANLINESS
- clean windows, walls, doors and trim
- add some fresh paint and paper
- kitchen and bathrooms spotless and fresh
- clean all appliances
- clean carpets / touch up floors
- make mirrors sparkle
- clean exterior of furnace and hot water tank
- paint unfinished basement floors and put strong light bulbs in fixtures
- jewelry and valuables locked safely away or taken with you
CREATING A BUYING ATMOSPHERE
Here are some helpful hints to follow once the buyer is inside and your home is being presented:
- remember the cardinal rule, "First impressions are lasting impressions"
- turn on all lights
- shut off the radio and television - they distract
- open blinds and drapes during the daytime
- never apologize for the appearance
- arrange to be absent during showings (especially second or third showings) or be inconspicuous. If there are too many people present, the prospect may feel like an intruder and hurry through the house
- keep pets out of the way - preferably out of the house
- do not tag along with the prospect and the salesperson. You will be called if needed
- create a temperature change from the outdoors. In winter, turn up the thermostat several degrees and have a fire in the fireplace. In summer, set the air conditioning on high.
- have the house smell like a home - have the smell of baking or fresh perked coffee in the air
- check and recheck your bathrooms and kitchen
- a word to the wise - try to avoid conversation with the potential buyer - especially regarding such topics as price, terms, possession, etc. - refer them to your salesperson
Upon entering into a Listing Agreement, be prepared to provide the following information as soon as possible:
- evidence of title (deed)
- property survey
- most recent property assessment
- most recent property tax bill
- utility bills (electric, gas, water, etc.)
- mortgage documents
- Lender's name, address, phone, contact person, mortgage account number and present balance
- any information on other loans/mortgages against the property
- your lawyer's name, address and phone number
- it may help the sale of your property if you provide information on annual heating, electrical and water expenses and any recent substantial home improvement costs
- your work number
- neighbour's phone
- information/brochures about your property
- attractive exterior photos of home and property in other seasons
- your thoughts on special features of your home or community
- personal property which may be included in the sale - whatever you feel might have special marketing value to the average buyer
- house keys
CONDOMINIUM OR TOWNHOUSE
- Corporation Declaration and By-laws
- Corporation Certificate of Insurance
- Corporation current budget
- Name of Management Company, phone number and contact person
POINTERS FOR SELLERS
The following list of pointers may be useful to you but isn't exhaustive.
DOCUMENTS - Please take to your lawyer, your Transfer/Deed, survey, tax bills, and mortgages (including the address and file reference number of each mortgage holder). Also let your lawyer know how the premises are heated. If you are unable to find any of the above, don't worry - just send what you can.
PUBLIC UTILITIES & HEATING - If oil or propane heated, arrange to leave a full tank of fuel as of the closing date, and your lawyer will charge the buyers accordingly on the Statement of Adjustments.
Arrange for final readings for hydro, water and gas (if gas heated) and give your new address to each department so that the final bills may be sent to you. These will cover the period until closing.
As a rule, if the property is a Condominium townhouse, the water is included in the monthly maintenance; and if it is a Condominium apartment, in many cases, hydro, water and heating are all included.
FIRE INSURANCE - It is customary for the buyers to place their own insurance and for you to cancel the existing coverage (after closing - not before!) and make arrangements with your insurer for a rebate. The property is at your risk until completion of the sale and must be kept insured by you until then.
DISCHARGES - The lawyer will be contacting each mortgage holder for a discharge statement and will pay off each mortgage from the sale proceeds (provided there are sufficient funds).
If you have previously paid off a mortgage, but never had it discharged from title, please let him know at once.
If the Offer required you to discharge all existing mortgages by closing and does not require the buyers to accept a lawyer's undertaking, please contact him immediately.
PROOF OF PAYMENT - In closing the transaction, it is usually necessary to provide proof of payment of your most recent tax, hydro, water, gas, mortgage and Condominium maintenance payments (whichever are applicable).
To avoid problems, when you attend your lawyer's office to sign the papers, bring receipts for your last payments of the above.
CLOSING - There is no automatic time for closing - the time is set by the lawyers a day or so beforehand. The closing may last anywhere from a few minutes to several hours, depending upon the complexity of the transaction, lineups, etc., though it must take place during the Land Registry office's hours (normally from 9:30 a.m. to 4:30 p.m. Monday to Friday, excluding holidays.)
REAL ESTATE COMMISSION - It is customaryy for the seller's lawyer to pay the balance of the real estate commission from the sale proceeds. If the deposit exceeds the total commission, the real estate broker holding the deposit will refund the difference after closing.
If You Were A Buyer, What Would you Pay for the Right Property?
- What the sellers are asking?
- What the sellers said they need to have?
- What the sellers have invested in the property?
- What the sellers need to purchase their next property?
- What similar properties have sold for?
When It Comes to Pricing Your Property Remember:
- Buyers are more likely to view properties priced right
- Your price should be based on sold rather than unsold comparables
- Overpriced properties help those that are priced right sell
- Overpriced properties often end up selling below market
- More liberal terms will bring a higher price
WHY WON'T YOUR HOME SELL?
The home is spacious, with four bedrooms, a large den and a two-car garage. It's located within minutes of quality public schools, several retail stores and a variety of recreational activities. The local residential real estate market is hopping and many homes are quickly selling. Okay, so why has one house languished on the market for eight months?
The longer that a home sits on the market, of course, the more likely its asking price will be reduced...and reduced...and reduced again until finally, the seller is so anxious to unload the house that any offer will do.
In today's relatively healthy economy, in which there certainly isn't a shortage of prospective buyers in most areas, why do some homes simply sit on the market while others are quickly snapped up? There could be many reasons.....
If buyers and agents aren't responding, if offers are far below what you're asking, or if your home has remained on the market far longer than similar properties, then its time to re-examine the listing price.
There may have been a time when homes could be over-priced and owners might still make a sale. Forget it...those days are simply gone.
Buyers now have buyer agents who know the market and the Intenet makes it tough to be anything but an informed buyer.
As a result, buyers who do their homework have little reason to be shy about making an offer with what they regard as a more realistic price.
The condition in which a home has been maintained directly affects marketability and pricing. Buyers, regardless of whatever restoration fantasies they might harbor, quickly return to reality when they realize they don't have the time, skills or money to embark on a major rehab job.
But, "poor condition" does not necessarily describe homes in need of a major overhaul. Minor things can also set off buyer jitters, - a touch of peeling paint, dirty carpets, a drippy faucet. None of these items is a big matter individually, but they do make buyers wonder if bigger problems lurk unseen. The botom line - clean and fix-up a home before placing it on the market to speed the sale and reduce buyer anxieties - clean windows, a swept curb and a fresh coat of paint here and there can do the trick.
Real estate is all about location and some locations are clearly better than others. Since you can't move your home, the alternative is to improve what you have. For instance, if you live on a busy street, perhaps hedges or an ivy-covered trellis can be used to absorb noise and unwanted views.
You want to make matters as easy as possible for buyers. A lock box on your door allows agents to schedule appopintments at the convenience of their clients. As well, owners, pets and children should be away if possible, when open houses and viewings are scheduled.
The fact that a home has minor drawbacks should not be surprising. There are no houses that are perfect for everyone, but there are houses that work wonderfully well for specific buyers.
There is one surprising reason why a home may not sell - all homes are unique. It sometimes happens that a home remains unsold not because it has some flaw or because of poor marketing, but because in the universe of possible buyers, not one is ready to quickly purchase a particular property.
The odds are against it and good marketing should make such things rare, but it does happen. What to do? Keep on selling. There are buyers out there; the trick is to show the value in your home. That's most likely to happen when your house is prepared in advance, its pricing reflects market place realities and the marketing plan is designed to reach the largest number of prospective buyers.