I frequently receive requests for Market Evaluations from clients and potential clients. In today’s market it is so important to know what our options are, and what the true value of our home is before putting it on the market. Each REALTOR® has a different way of determining what price they will recommend to their clients when someone requests a market evaluation. Often the home owner is surprised at the price they are provided by the REALTOR® who they have requested the information from.
I thought in this month’s newsletter I would provide some very basic information as to the process I go through when determining home prices, and how I come to the price that I provide when fulfilling requests for evaluations.
Most of my requests for evaluations come to me via my website. The home owner provides me with their address, and basic information about their home and request for a price evaluation of their home.
When I receive this information I do a full market analysis for the area specific to the neighbourhood in which the home is located.
An analysis will include research into the pricing of homes that are actively for sale in the area, as well as the prices of homes recently sold. It may also take into consideration nearby amenities such as schools and shopping facilities. (Homes near a school will sometimes have a better potential for sale than those that are not, and therefore may command a better price than the same home that is not near such amenities.)
Once I have all the figures and have determined a price range for a home, I then send the home owner an email advising them what I believe the true value of the home is based on the information they have provided for me.
Now comes the insight that every home owner needs to know and understand about the options REALTORS® have to consider when we are providing home evaluations to potential sellers. There is a reality to realty!
I think the easiest way to explain how a REALTOR® may work in providing initial evaluations to a home owner is to give you an example:
Upon receiving the information from a home owner about their home, I research the area, the current market, the number of homes that are currently for sale in the area with their current listing prices, and a list of homes recently sold in the area and the prices those homes have sold for. All the homes I research are based on the same criteria of information the home owner has sent to me, so that I can determine as closely as possible the most appropriate price based on similar homes.
It might look something like this:
Homes Actively For Sale – 9 homes found listed in the surrounding area that are similar in size and structure with similar finishing as the home owner. They are on the market at prices ranging from $445,000.00 to $499,000.00. Upon closer look, two of the homes have lowered their prices recently to the lower range of pricing. Most of the newer listings are priced in the mid-range, and have also lowered their prices from their initial prices, and most of the homes have been on the market for over six months, with one of them being on the market as long as two years.
Homes Recently Sold – Two to five homes that have been the most recently sold that meet the same criteria were sold at prices ranging from $410,000.00 to $439,000.00. In looking at the original listing prices of these homes, they had been listed from $440,000.00 to $470,000.00. Four of the five homes sold only after the owners relisted at a lower price. Most sold at the upper range of the sold prices however were on the market for over 6 months before being sold.
Looking into sold properties is more important than comparing the pricing of active listings (properties that are currently for sale). Sold properties indicate how much buyers are willing to pay for your home given the current market. Therefore when receiving comparable home prices from your REALTOR® is more important to put more weight on the pricing of homes being sold than the prices of those being listed when looking for an accurate price point.
My Pricing Determination – As a REALTOR® I have an obligation to anyone who contacts me to provide them with the best and most accurate information possible. However I also have to consider the position of the home owner.
Price Determination Example 1 - On home evaluations for potential clients, knowing that they want to get the most value for their home as is possible, if I really want to obtain them as a client I can take the information I have gleaned from my research and price their home in the high range and send them a recommendation of listing between $460,000.00 to $470,000.00.
By doing this, the home owner may get excited about using me as a REALTOR® and choose to list their home with me. I can then initially list the home at that price, however I know from my research that unless there are special circumstances, it is unlikely the home will sell at that price, so why would I want to give my client unrealistic expectations? Well, if I price the home at a higher price, and the price is similar to other homes that are actively for sale in the area, it is more likely that the client will decide to list his home and that he will list his home with me.
However, experience has proven, time and again that in the end, the homeowner will in most cases over time, agree to lower the price to a level that is more reasonable to potential buyers. He or she has to in order to get buyers to come through the home. REALTORS® know this and often when providing initial market evaluations can use this practice to obtain the initial listing.
Price Determination Example 2 – Taking the same information and research, I determine that the home is likely to sell at a price that is within a price range of $430,000.00 and $450,000.00 depending on upgrades and other information that can only be determined upon viewing the actual property. I know that by keeping the price estimate truer to the reality of what the current market is at, there is less likelihood for disappointment for my home owner. They are not going to have unreasonable expectations and if the price has to be lowered, it will not be as significant a drop in order to sell the property as it would have to be in Example 1.
When I provide estimates, I prefer to look at what I believe the true value of the home is and provide my recommendations to the home owner based on what I believe I can sell their home for in a reasonable period of time. I prefer to be conservative in my estimates as it is always easier to explain to a client reasons why they should increase their listing price once I have actually attended their home, rather than try to explain why my online evaluation is over estimated and that they need to lower the price when the time comes to list!
Every REALTOR® has their own reasons for pricing homes the way they do, however regardless of what pricing is done, the fact remains, the market always sells at the market price regardless at how the initial listing is priced. It’s imperative that in order to get the best price for your home that you remain competitive, yet flexible in pricing. How flexible is entirely dependent upon how quickly you want to move your home in the market.
Think of it from a buyer’s perspective. If you have the option of looking at 9 homes in the area you want to purchase in, and all those homes fit the same or very similar criteria, and all are in similar condition, are you going to spend an extra $50,000.00 you don’t need to spend?
True Pricing Determination – The most accurate way to determine what you should list your home for in order to get your highest price in the most reasonable amount of time is to have a REALTOR® attend your home to do an onsite home evaluation. REALTORS® know what upgrades in your home can accentuate the value of your home and physically attending the residence and viewing your home is the only truly accurate method of determining the most realistic price of your home. It also provides you an opportunity to ask questions that are important to you in regards to not only potential listing price, but also market timing. An experienced REALTOR® can often provide you excellent insight that can help you meet your personal goals.
Many of you who are recipients of my monthly newsletter are actively researching the market to either buy a home or sell your current home or both. I hope this newsletter helps to explain why an online evaluation often seems on the lower end of the market and have been curious as to why your home is evaluated at the low end of the market.
Current Market Trends – It is important to understand the significance of the current market trend when pricing your home as well. Without taking into account current market trends, many homes are overpriced and simply won’t sell if they have not priced themselves according to the current market trends. Remember too, that when you sell at lower prices, you are also in a position to buy your new home at a lower price as well. Timing is important, but swings both for selling and buying. These are important things to factor into your decision to sell and what price point to set. Good advice from a realty specialist can help you make those decisions.
Free Onsite Evaluations - If you would like an accurate evaluation of your home and recommendations based on the current market I would be pleased to visit your home and provide you a full onsite appraisal, provide you a package with the latest in market information to help you make a sound decision regarding your home and answer any questions you might have regarding the market. There is never any obligation and I am always ready to help.
If you would like to have a current market evaluation done on your home to determine what your next step should be, I’m here for you. My business is made from sincerely helping people achieve their personal goals, not trying to convince them to sell if it is not in their best interest. Nor will I suggest an unreasonably high listing price in order to obtain your business. I will give you straight facts and advice and the rest is up to you!
Please don’t hesitate to call me at any time. My personal cell phone number is 403-399-0809, or if you prefer, my personal Email of Natasha@HouseHuntingAdventures.com. There is never any obligation and I understand and respect that you may only need an evaluation for current interest and that you may not even be in the market to sell your home. I welcome any opportunities to do onsite market evaluations and enjoy meeting people and providing any market insight you may be in need of.