How to determine "Market Value"
Wednesday Jun 03rd, 2020Share
I am asked frequently, "what is the value of this house?". The answer really is simple: What a buyer is willing to pay.
First, we must understand what is in our control and what is not. Secondly, everyone values house styles and finishes differently. So let's dig a little deeper.
When I am representing a seller, I put myself in the shoes of a buyer and buyer's agent. What are buyers looking for? What are they typically spending in that specific neighbourhood? What are the current trends?
As a seller you control:
- The price you list your house at. This is the top marketing tool because it's the first piece of criteria looked at. So, depending on our listing strategy, we'll price the house accordingly.
- The condition of your property. This can be kept fairly simple with de-cluttering and cleaning or we can roll up our sleeves higher and look into some high return renovations (a separate blog). Curb appeal has a huge impact on bringing buyers into seeing the property. This coincides with good photography when listing.
- Access to your property. If you're able to have a flexible schedule or stay with family or friends while on market, you're eliminating the time obstacle buyers can run into when trying to view a property.
What you do not control:
- The economy. Finances have arguably the largest influence on motivation. When rates are low and money is "cheap", the buyer pool increases. When COVID-19 hit, the economy took a nose dive.
- The motivation of your buyer and your competition. Some clients have to move sooner than later and need to find a home quickly.
- Perception of Value. This is really important to understand fully. Your neighbours home might have achieved a very high sale price so you might think your home should sell for that too. The reality is, that specific buyer might have valued something in that home/lot that you might not have and therefore, they were willing to spend what they needed to to win. The renovations you've done, the hours of sweat and tears you put into that fireplace mantle holds great value to you - it might not to someone else. Timing is also a factor, influenced by motivation. Right time, right home with the right buyer. We’ll find yours too.
As a buyer you control:
- Where you want to live.
- Style of house you want and it's qualities (large backyard, no backyard, open concept etc.)
- How much you're willing to spend with what's available to you.
- When you want to move (although this can be a negotiation on the purchase).
You cannot control:
- The market.
- The economy.
- The motivation of your competition.
At the end of the day, those that are most motivated; with the means to afford a winning bid, with a tenacious agent, will purchase the home. The sale prices reflect what a buyer is willing to pay.
Does this help? Do you have questions? I'd love to help.