“Price it right, and it will sell,” is a common refrain in the real estate business, but how do REALTORS® determine the proper list price for your home?
According to Karen Gonzales, a Realtor with Sutton Group Canwest, it’s not as simple as looking at the assessed value of the home on your property taxes.
“The assessments are only a guideline, simply an estimate for tax purposes,” she said. “And really, the market fluctuates according to supply and demand, and the current economic conditions.”
Gonzalez says an important tool Realtors use to determine the right list price for a home is called a comparative market analysis, which involves researching the sales of similar homes.
“We take into consideration the condition of the home, whether it’s renovated or original. Curb appeal, the location. Of course, square footage,” Karen Gonzales, Sutton Group Canwest
“We take into consideration the condition of the home, whether it’s renovated or original. Curb appeal, the location. Of course, square footage,” said Gonzales.
She says the analysis only includes recent sales, usually from the past 60 or 90 days, so your former neighbour telling you what they sold their house for a year or two ago is not a useful benchmark.
For homeowners who think it’s OK to start with a high list price and then drop it if necessary, Gonzales says setting the right price for your home from the start is crucial.
“Or course, we do try our best to work with a client’s needs, but getting your property listed at the correct price right off the bat is very, very important,” she said. “Otherwise, we are then reducing the price, and it could start to look stale, or buyers could think there’s something wrong with the property. And, usually, you get the most amount of attention when you first list a property.”
Gonzales says another statistic that buyers sometimes see is the benchmark price, which is a valuable figure to know, but doesn’t factor much into deciding the right list price for any given home.
A benchmark price is the average price of a “typical” home in a certain community, which ignores the value of higher- or lower-end homes.
However, the benchmark price, often published by local real estate organizations, can serve as a useful resource for tracking whether overall prices are going up or down in an area over time.