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Home > Mortgages >

Price your home for a quick sale

When a neighbour asked $420,000 for his house, almost double what John Stevens paid for his house in London, Ontario, two years ago, Stevens saw dollar signs in his head. "Based on the value of the neighbourhood, the number of rooms and all those logical factors, that shouldn't be the price of this home," says Stevens, who asked that his real name not be used. "But if that's what the market ponies up, guess who's moving!"

Your perception of what your home is worth can be entirely different than its market value. "People buy a house, then make it a home," says Stephen Ord, operations manager for Century 21 First Canadian in London, Ontario. There is a big difference between the two -- one is logical, the other is emotional.

Perhaps Steven's neighbours spent most of their lives in this one home, raised their family there, renovated it several times and put in a pool -- in their eyes, the home is priceless. But buyers won't pay for someone else's emotional attachment.

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Real estate experts say it's customary to shoot high and be willing to settle for a little less when setting an asking price for your home. But how do you know what the magic price tag should be? Read on to learn how to set a reasonable price on your home and get the best return on your investment.

Put an agent to work
A real estate agent can help you put a realistic price tag on your home. "We don't have any emotional attachments," says Gwen Blake, a home consultant for Re/Max Nova, in Dartmouth, Nova Scotia.

Agents will derive a price using Comparative Market Analysis (CMA). This report compares prices of homes that match the style, neighbourhood and size of your home. The CMA reveals the price other homes sold for in your area. It also includes the price of current and expired listings (the ones that did not sell).

Ord suggests there is a method to using those numbers. "Let's price slightly below competition so they look at ours first, and let's try to be over the price of what others have sold for, but not so much over that we hit the expires," explains Ord.

Instead of looking at the stats on homes that sold a year ago, because the market can fluctuate quickly, it's important to use prices for homes that sold within that past few months or are as current as possible.

Providing this service is part of a real estate agent's job, whether she visits your home or asks a series of questions over the phone to pinpoint the price. If an agent visits your home, the price will be more accurate as she can include more details about your home.

Providing CMA information is a free service -- after all, agents are building a relationship with you in hopes you will eventually hire them to list your home. It's wise to seek more than one opinion from various agents because one price may be skewed; it's best to get use an average.

First impressions rule
Landscaping and the curb appeal of your home increase the asking price because people are easily swayed by first impressions, says Craig McIntyre, a managing broker with Riverside Century 21 in Kamloops, British Columbia.

Generally, the price of the home can go up a few thousand depending on the type of landscaping. At the very least, a tidy, well-maintained lawn will fetch a better price than a weed infested lawn.

But don't let that backfire: high-maintenance landscaping can scare off some buyers. For more advice on how to clean up your yard to attract buyers, check out Bankrate.ca's story, "It pays to clean up your yard."

Inside the home, renovated bathrooms or kitchens can also bump up the list price. McIntyre says you can ask 80 cents to the dollar or more for updates and renovations for these two areas. "If the kitchen and bathroom are nice, they (homebuyers) will over look a lot in the rest of the house."

And ask yourself: How contemporary is your home? Often a buyer will go with another home if the fixtures and colours are up to date, because it means less work for them when they move in. The overall look and growth of the neighbourhood is also a consideration. A dying neighbourhood will dictate a lower price than one that is growing.

Market research
If you're in a rush to sell, you aren't going to wait around to haggle over a few thousand dollars. If, for whatever reason, you need to sell your house immediately, that will dictate a lower price, says McIntyre. If time isn't an issue, you can hold out for more money.

Another factor in pricing your home is the going interest rate. The lower the interest rate on a mortgage, the more people can afford to pay more for a house, which means you should price your home higher. For a look at current mortgage rates across Canada, check out Bankrate.ca's mortgage rates home page.

The strength of the home-buying market will also dictate price. For instance, if there is a shortage of bungalows and more people are looking for one-floor homes, the price will rocket for bungalows.

And what if you're caught in a buyer's market? Well, you may have to reduce the price of your home to fit the current market. But if you're in a seller's market, where not many homes are up for sale, you can ask for more money. "It's a simple supply and demand," says Ord.

In Nova Scotia, many agents advise going $4,000 to $5,000 over the asking price. But that caveat varies from province to province and city to city. In Ontario and British Columbia, for example, agents say the market dictates how much higher you can price your home. But all agree it's always better to err on the high side and then settle for slightly less if you have to.

Melanie Chambers is a freelance writer based in the burbs of London, Ontario.

-- Posted: April 18, 2005
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