Today, we’ll discuss how I determine the listing price of a home. In Quebec, information for what homes sold for in previous sales is only accessible to brokers. With access to that information, with the use of comps in your neighbourhood, and with so much personal exposure to homes, I can come up with the right pricing strategy for your home.
As it stands today, there is no perfect science to determine the value of your home. So to understand this, just look at companies like Zillow, Redfin, and other major tech board real estate companies in the US. Over the last several years, they have collectively invested 10s of millions of dollars into trying to perfect their algorithms that estimate the value of all. But those algorithms are still wrong by huge margins more than half and a big reason for this is because while computer models can go a long way in reducing human error.
The reality is, is that people buying homes are still humans. And we make all our decisions for reasons that are highly personal and individual. So just think about how a house that has features that remind you of something you loved about the home you grew up in will often cause you to overlook some of that home shortcomings. These characteristics are different for each individual, which is what makes finding the perfect price a challenge.
That being said, when it comes to selling your home, there are a few things more important than how you get. Too high and you don’t get enough interest in demand. Too low and you will end up attracting the wrong buyers to visit which again can hurt your chances of selling. With this in mind, let’s look at some of the most common things I look at when helping clients price their homes.
Comparables, sometimes referred to as comps, are all the recent home sales in your area that are reasonably similar to yours. By examining these recent sales in detail, we can get a sense for what the market is for homes like yours. In some cases, we even know the number of offers that were made on a home, what it was listed for and what it was sold for. And by reviewing photos and even calling the listing broker was sold the house, we can determine the style and condition of those homes as well. With this information, you can quickly start to narrow in on the right range for your home’s value.
In Quebec information about what homes are sold for is only available to realtors. And so you’ll need to work with one in order to have this information available to you. I also have access to a lot of statistics that show us what the market is like in each area. So I regularly stay on top of these trends to help determine if certain areas or neighborhoods have higher than usual demand or features about them that buyers are looking for right now.
A recent example of this is how I was able to watch the growing trend of people moving away from the city, looking for homes with larger yards and a space for a home office during the pandemic. This helped me price homes effectively to capture more value for my clients early on and throughout the recent upward trend of housing markets in our area.
I’m touring a lot of homes through which I’m getting in-person exposure to what features and areas most buyers in the market are excited about. I see which homes are selling quickly and which ones are struggling to get interest and use that local expertise to help guide my suggestions about price.
There is no substitute to listen to your clients. What I hear from them what they love about their home goes a long way to finding those little hidden opportunities to help capture the true value for the perfect buyer.
It’s also important to consider how people shop online for homes when pressing their home. For example, many people might have a notification setup on centers to notify them of all homes to hit the market under $500,000. If you price your home at exactly $500,000, you would miss out on notifying this entire crop of potential buyers, which limits your exposure. Pricing the home in this case for $499,000 could have a big impact upon the ultimate selling price.
Stay up to date on your home’s value
I recommend all of my clients to stay on top of their home’s value, even if they’re not planning on selling right away. It’s often the most significant asset they own and the most important source of retirement savings for most of us. So even if you’re not looking to sell your home anytime soon, just let me know and I’d be happy to give you a free home evaluation anytime.
This is #AskPete. If you have any real estate questions, feel free to send them and I will get you the answers. Or stay up to date on the latest tips for real estate buyers and sellers by clicking the YouTube button below: