It’s time to decide on an asking price. You know that setting the right price for current housing market conditions is crucial, and you’ve been told that overpricing can spell death for a new listing. But how do you determine the fair market value of your home if you don’t know the intricacies of your local housing market?
Wouldn’t it be great if you had some insider knowledge? Some sort of real estate cheat sheet that gives the inside scoop on the local real estate market?
It would have to contain valuable information that you could never determine on your own, like how much your neighbors’ houses are selling for and the current mood of the local housing market. And just what is that all-important asking price that will ensure maximum return on your investment without pricing you out of contention?
There’s good news! Such a document does exist, and you can have it thanks to your local Royal LePage real estate agent. When you sign on to work with a Royal LePage sales representative, you’ll receive a custom-prepared Comparative Market Analysis (CMA) that indicates what today’s buyers are willing to pay for a house like yours in your area.
Your agent does this property assessment by comparing the market activity and prices of homes in your neighbourhood that are similar to yours. Prices for homes that have recently sold represent what buyers are prepared to pay. The price of homes currently listed for sale represents the price sellers hope to obtain. And those listings that have expired were generally overpriced or poorly marketed.
The CMA gives you a sales edge that your competitors may not have. The for-sale-by-owner (FSBO) crowd can’t access information like this. Real estate industry insiders have proprietary access to much of the data used in the analysis, and it’s your agent’s years of experience and intimate knowledge of the local housing market that makes him best qualified to interpret the data and make sound recommendations.
Sure, you may see what people are asking for their homes by studying MLS listings, but that doesn’t help you determine the actual selling price. The selling price almost always differs from the asking price, sometimes drastically depending on the state of the real estate market.
And because your agent earns their livelihood from the buying and selling of homes in your neighbourhood, you can be assured they have an ear to the ground where market conditions are concerned. By understanding and evaluating the local housing market, your agent can adjust the sales strategy accordingly.
The last thing you want is your unsold home languishing because the selling strategy was developed without considering whether it’s a seller’s market, a buyer’s market, or somewhere in between (balanced).
Understanding market conditions is as simple as knowing the basic law of supply and demand. When there are more homes for sale than there are potential buyers, house prices drop. When there are fewer houses on the market than there are buyers, house prices will climb. When the number of homes on the market is roughly equal to the number of buyers, it’s called a balanced market.
Here’s how the housing market could affect your approach to selling:
Seller’s market
This is the ideal position for a seller. With fewer homes to choose from, competition between buyers becomes a factor. This can spawn bidding wars that drive prices up.
You can expect to sell your home faster in a seller’s market, and when it comes time to negotiate, you may not need to compromise on any unattractive conditions requested by the buyer.
Buyer’s market
Your position as a seller becomes a little trickier in a buyer’s market. A buyer’s market means that you face more competition from other sellers. Your home may stay on the market longer, which can give the buyer more leverage.
Expect to sell for a little less, and be prepared to compromise or accept conditional offers more readily than you would in a seller’s housing market.
Balanced market
Selling in a balanced market is a much more predictable endeavour. With sellers and buyers in equilibrium, home prices stabilize and the atmosphere on both sides of the transaction becomes relaxed.
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