Kim Mullan Blog
Who Determines the Value of Your Home
September 30th 2015
Sometimes when I meet with prospective sellers and we sit down to look at data on home sales they will give me their expectation of List Price. Often by List Price they mean Sale Price. Where do these numbers come from?
Sometimes their price expectation comes from their Father, their neighbour or their bookclub.
Other times they are interviewing several Realtors, comparing data and information and trying to make an informed decision about what business model, marketing strategies, experience and resources a Realtor brings to the table to help them realize the highest offer possible for current market conditions. Sometimes they get off track and simply choose a Realtor by the highest valuation they hear.
The problem with that is that if those valuations aren't accompanied by a post-dated cheque of the same value they don't mean very much.
Because neighbours, friends and familly don't determine value of your home.
Even Realtors don't DETERMINE the final price of your home.
BUYERS DETERMINE THE VALUE OF YOUR HOME when they make an offer or when they fail to make an offer.
The market conditions- lack or saturation of similar homes available, motivation of buyers let alone actual presence of buyers, presentation of your home compared to other offerings etc. all combine to determine market value.
How does pricing impact your ability to realize the highest offers possible? By pricing too high compared to similar homes you risk alienating your audience. Price should be justifiable and encourage buyers to explore your property further.
On unique homes pricing can be more complex and a savy Realtor will need to present and position you for maximum interest while exposing you to the largest possible target market.
A good Realtor will encourage you to price for the largest audience possible and interpret market data/feedback quickly so that you are empowered to make educated decisions about how and when to respond to that information strategically. If similar homes are selling and yours is sitting the market is sending you an important message.
Sometimes a neighbourhood or type of property will have quiet activity - it's your Realtor's job to figure out if that lack of activity warrants a price adjustment or if it's the state of the market for your type of home...if nothings moving it isn't nececcarily you. If thing are moving and you aren't...odds are buyers aren't seeing your value.
A good Realtor will help you navigate the market conditions & audience feedback, educate you about potential risks & rewards and empower you to realize the highest potential selling price.
So who determines Market Value? The buyer audience.
Watching where they put their dollars gives us some indication of what you can expect.
Listing Price, Expectation of Market Value & Actual Sale Price are very different things. A good Realtor will help you to merge those numbers so they are all within the same ball park.