One of the many benefits of owning a home is having the ability to sell it one day – hopefully for a healthy profit, which can then be leveraged to purchase a larger home, an investment or recreational property, or help finance your retirement. Once you decide that you’re ready to take the leap and list your home for sale, the next question you need to ask is, “How much is my house worth?” This is a loaded question indeed. It opens the floodgates to a slew of other factors that will each impact your decision on asking price to varying degrees.
The Price Is Right
We can’t stress the importance of setting the right asking price. An overpriced home runs the risk of sitting (and stagnating!) on the market for a prolonged period of time. This can seriously hurt your bottom line, especially if you’ve already purchased another home and you’re paying two mortgages simultaneously. Beyond that, overpricing your home could make competing listings look even more attractive. And oftentimes, fixing the issue isn’t as simple as just re-listing the home at a lower price. Buyers who are shopping the market will have already seen your listing, and they will either discount it as old news, or they may wonder what’s wrong with the property, in light of the price reduction. An overpriced home is not an ideal situation to find yourself in, in any selling scenario. On the flip-side, underpricing your home means leaving money on the table. Setting the right price from the get-go will ensure your listing attracts serious buyers, and some feasible offers too.
So, how much is my house worth? Let’s find out.
Is it a buyer’s market or a seller’s market? The real estate market is impacted by everything from the local and larger economic picture, to the weather. The type of market speaks to demand for homes, which will affect how quickly your home sells and will help answer the question, “How much is my house worth?” A buyer’s real estate market is characterized by more homes for sale than people to buy them. An influx of listings (or fewer homebuyers) means buyers face less competition in the purchasing process, and can often take their time and see more homes before making an offer. Buyers also have greater negotiating power when it comes to their offer and conditions of the sale.
If you’re not sure what your home is worth, have your real estate agent pull comparable sales to help answer the million-dollar question (depending on the market, of course!) “How much is my house worth?” This will give you an idea of what homes in the same neighbourhood have sold for in recent weeks. This is a realistic reflection of what buyers have actually paid for similar homes in the same area. It’s also prudent to keep an eye on your competition. Pay attention to homes for sale in your neighbourhood, their condition and features, and the asking price – but take it with a grain of salt. Depending on the seller’s strategy, they could have listed low in an attempt to attract more potential buyers.
READ MORE: Selling In A Buyer’s Market
A home’s location has a huge impact on its value, and rightfully so. It’s a particularly important consideration for buyers, as location is one thing you definitely can’t change about the home. Location will define the liveability of the neighbourhood, the price buyers need to pay to get into the area, and the resale value when it’s time to list it. Translation: hot neighbourhoods are always a hot commodity, oftentimes trumping market conditions.
READ MORE: Location versus Style
A home’s location typically trumps style when it comes to value, but that’s not to say condition, features and upgrades don’t matter when you’re determining what your home is worth. A fixer-upper and a move-in ready home will vary in terms of price, even with identical floor plans. Items such as a new roof, a finished basement, renovated kitchen and baths can make a difference to the bottom line, and the return on investment could be well worth the money and effort. This is precisely why many home sellers choose to renovate or update their home before listing it for sale. Evaluate the cost of the renovation and consider whether you’ll get that money back in the face of real estate market conditions.
READ MORE: Top 6 Home Renovations
There’s a lot to think about before you put up that For Sale sign. What’s happening in the real estate market? Is there buyer demand? Who’s your competition? What is my house worth? And ultimately, what can I do to make the sale? Start by working with an experienced real estate agent who has a thorough knowledge of your specific area, the market conditions and your target buyer. Discuss all of the above with your real estate professional. At the risk of sounding like a public service announcement, education really is key in the home buying and selling process, allowing you to make confident decisions concerning your property – and your financial future.