Megann  Willson

Megann Willson


HomeLife/Realty One Ltd., Brokerage

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How do you know what your home is REALLY worth?

Sellers always approach agents with an idea of what their property is worth. Sometimes it’s a very good idea. Other times, not so much. In a slow-moving neighbourhood, it can be difficult to decide, because the “comps” are few and far between. And if the market is making a significant ramp-up or correction (such as we’ve seen in Ontario over the past couple of years), then it becomes quite a complicated situation.

The real problem, however, often lies with the seller’s “mental comps”. What do I mean by that? For example, there’s always a bias toward one’s own property, so some sellers will look at properties selling for less than they want to receive and suggest that it isn’t because the market has changed, or demand is different, but because that house “isn’t as good as theirs”. They’ll use a host of justifications for this, from square footage to how many owners, to how they are convinced buyers will behave. This is true no matter how many, or how few, homes they have sold. Then there are “influencer comps”. No matter how experienced their agent may be, many sellers are heavily influenced by others they trust. Just like the way they’ll ask their friends and relations to weigh in on health issues, many will believe the advice of those in their trusted circle, before their agent.

Here is what we know as professional REALTORS®: A property is worth the price where a willing buyer and a willing seller can come to an agreement. Not more, not less.

There are so many factors that impact the price eventually realized for a home. What time of year is it? What are the market conditions? What type of home is it? How many bedrooms? Bathrooms? Condition? Does it have a lot of light? How much work does it need? Does the buyer feel they can afford renovations? What is the closing date needed by both parties? What were the circumstances surrounding the sale – were the buyers simply exploring, or did they need to sell at that time?

The best any agent can do, is to make an educated guess about the price, and recommend a starting range. That range is typically lower than hoped-for, in order to drive traffic, because the more buyers who view a home, the greater the odds of receiving an offer (or multiple offers). It’s important that the seller not take that price as a ‘given”, and that buyers know it isn’t like shoe shopping – there will be negotiation involved. Then, if the home isn’t getting sufficient requests for showings within the first few days or weeks (depending on how fast surrounding properties are selling), there are two levers where sellers can have the greatest impact. The first is adding value (including perceived value), by renovation or staging. And the second, as you may have guessed, is price.

All in all, what this says, is that since you can never precisely replicate your neighbour’s house, or the homes of your “inner circle”, nor the market as it was a week, a month, or a year ago, you also can’t use any of those indicators as a firm indicator of price – just a relative gauge, compared to other properties selling under the same conditions.

So, when listing your home, it’s always best to put your best foot forward, determine whether it is a buyer’s market or a seller’s market, and be prepared to be flexible if the property isn’t moving, and you need to sell.

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