PRICING YOUR PROPERTY TO SELL
Ensuring your home sells at fair market value within a reasonable period of time is dependent on your pricing strategy. Your Sotheby’s International Realty associate will help you create the ideal strategy based on the following factors.
Determine Fair Market Value
Fair market value is the price a buyer is willing to pay for a home given its condition, recent comparable sales and listings, and the local real estate market.
Comparative Market Analysis
To calculate the fair market value of your home, your Sotheby’s International Realty Canada associate will prepare a Comparative Market Analysis (CMA) report summarizing properties in your area with similar square footage, construction, age and condition that have recently sold or are currently on the market. Recent comparable sales and listings are two of the most important factors impacting fair market value. Comparable listings that expired before they had a chance to sell also offer an indication of the fair market value of your property.
Adjustments to your home’s valuation will also be made given its location (e.g. proximity to parks, waterfront, schools and transportation), floor plan, home improvements, amenities, parking, storage and other variables.
There are some extraordinary homes and estates that have few or no comparables. In these cases, preparing a CMA requires specialized expertise that an experienced Sotheby’s International Realty Canada associate can provide. If your property falls into this category, please visit sothebysrealty.ca to schedule a complimentary consultation.
Local Market Inventory and Trends
Other factors that may influence the fair market value of your home include whether it’s trending towards a buyers’ or sellers’ market, the number of similar homes on the market, interest rates and the overall lending climate, the average number of days similar properties are on the market, and whether similar properties are selling for above or below the asking price.
Factors such as macro economic trends, property appraisals or tax assessments may have some influence on the fair market value of your home; however, more often than not, this influence may be limited or inconsequential. For example, the assessed value of your property for tax purposes may be significantly higher or lower than its value on the real estate market. This is because buyers and investors will evaluate the value of your home against recent comparable sales listings, not against property tax assessments.
One factor that has no influence on your property’s fair market value is the price you originally paid for your home. Even if you purchased your property recently, the local real estate market and the market value of your home may have dramatically changed.
Price Your Home
Determining your home’s listing price is one of the most critical decisions you will make in your sales and marketing strategy, and should be done in consultation with your Sotheby’s International Realty Canada associate.
Your recommended listing price will take into consideration your home’s fair market value, adjustments for unique property attributes, neighbourhood market trends and appropriate pricing strategies given current market conditions. This may include:
- Pricing your home within the range of fair market value, slightly above actual sold prices of similar homes, but lower than the prices of comparable active listings.
- Pricing your home lower than fair market value in an attempt to incite a bidding war that results in a higher price.
The Risk of Overpricing
If you overprice your home above its fair market value, potential buyers and real estate investors will compare it unfavourably against recent comparable sales and listings. The risk is that your property will linger on the market for longer than what is typical for similar listings, stigmatizing it as an undesirable or blatantly over-priced property as a result.