Setting the Right Price for Your Home
When selling your home, one of the most important factors is setting the right price. If your home is priced too high and doesn’t sell quickly, you might need to lower the price, which can make buyers wonder why it hasn’t sold. On the other hand, pricing it too low might attract offers that are lower than what your home is worth.
A Comparative Market Analysis (CMA) is a useful tool to help you decide on the right price for your home. A real estate agent, who isn’t emotionally attached to your home, can provide the most accurate CMA. However, you can also do one yourself.
The Pricing Dilemma
Neither you nor a real estate agent can set the market value of your home; it’s determined by what buyers are willing to pay. A CMA gives you a range of prices based on similar homes in your area. Pricing your home too high can cause problems, but pricing it too low usually isn’t as much of an issue. Often, homes priced below market value attract multiple offers that drive the price up to its true market value. Essentially, the sale price is determined by supply and demand.
Different agents might give you different price ranges. Don’t assume that the agent who suggests the highest price will sell your home for the most. The highest price isn’t always the right price.
Finding the Comparables
To create a Comparative Market Analysis, you need to find homes similar to yours:
Consider physical barriers like highways, town borders, and railroads that might affect home values. Compare homes with similar square footage and ages. For example, a Victorian home might sell for more or less than a mid-century home in your area.
Sold Comparisons
Compare the listing prices of homes to their final sales prices to understand price reductions and the relationship between list price and final sales price. Look for market trends to determine if it’s a buyers’ or sellers’ market.
Withdrawn and Expired Listings
An expired listing had a contract that ended without a sale, while a withdrawn listing was removed by the seller. Look for patterns to understand why homes didn’t sell and how long they were on the market.
Pending Sales
Although you won’t know the exact sales price until a transaction closes, you can still ask the listing or sales agent for insights. Find out how long homes stayed on the market and if there were any price reductions.
Current Listings
Your competition consists of current listings. If possible, tour these homes to see what buyers are looking at. Note how you feel when you see these homes and try to replicate positive aspects in your own home.
Square Foot Cost Comparisons
Compare homes with similar square footage to get an accurate listing price. Appraisers usually compare homes within 10% to 25% of a given property’s square footage. Larger homes have a lower cost per square foot, and smaller homes have a higher cost per square foot.
Final Thoughts
After comparing similar homes, consider market trends. If the market is rising, you might list your home at a higher price. If it’s declining, you might list lower. Ultimately, you choose the listing price, but there’s no guarantee you’ll get it. Decide if time or money is more important to you when setting your price.
Getting Help
Many free tools are available to help with your CMA, including those from the Canadian Mortgage and Housing Corporation. Your best option might be to ask a real estate agent for a free CMA. They have valuable insights and can help you with every step of the selling process, from pricing to marketing to negotiating contracts.
If you’re looking for a complete real estate marketing and sales solution, consider working with a real estate agent to make the process easier and more efficient.
When selling your home, one of the most important factors is setting the right price. If your home is priced too high and doesn’t sell quickly, you might need to lower the price, which can make buyers wonder why it hasn’t sold. On the other hand, pricing it too low might attract offers that are lower than what your home is worth.
A Comparative Market Analysis (CMA) is a useful tool to help you decide on the right price for your home. A real estate agent, who isn’t emotionally attached to your home, can provide the most accurate CMA. However, you can also do one yourself.
The Pricing Dilemma
Neither you nor a real estate agent can set the market value of your home; it’s determined by what buyers are willing to pay. A CMA gives you a range of prices based on similar homes in your area. Pricing your home too high can cause problems, but pricing it too low usually isn’t as much of an issue. Often, homes priced below market value attract multiple offers that drive the price up to its true market value. Essentially, the sale price is determined by supply and demand.
Different agents might give you different price ranges. Don’t assume that the agent who suggests the highest price will sell your home for the most. The highest price isn’t always the right price.
Finding the Comparables
To create a Comparative Market Analysis, you need to find homes similar to yours:
- List Your Home’s Features: Write down details like the number of rooms, bathrooms, bedrooms, fireplaces, the type of heating and cooling systems, the age of those systems, types of appliances, and any special features like a pool or a second kitchen.
- Define Your Search Area: Start with homes within a ¼ or ½ km radius of your home. In rural areas, you might search by county; in suburban areas, by subdivision; and in urban areas, by neighbourhood or even a specific building.
- Check Recent Listings: Look at homes listed in the past year, six months, 90 days, and then the past month to see pricing trends. Notice whether home values are going up or down and if there are times of the year when homes sell for more.
- Focus on Recent Sales: Pay close attention to homes sold in the past three months and those listed in the past month. Appraisers typically use this time frame to determine a home’s value for mortgage purposes.
Consider physical barriers like highways, town borders, and railroads that might affect home values. Compare homes with similar square footage and ages. For example, a Victorian home might sell for more or less than a mid-century home in your area.
Sold Comparisons
Compare the listing prices of homes to their final sales prices to understand price reductions and the relationship between list price and final sales price. Look for market trends to determine if it’s a buyers’ or sellers’ market.
Withdrawn and Expired Listings
An expired listing had a contract that ended without a sale, while a withdrawn listing was removed by the seller. Look for patterns to understand why homes didn’t sell and how long they were on the market.
Pending Sales
Although you won’t know the exact sales price until a transaction closes, you can still ask the listing or sales agent for insights. Find out how long homes stayed on the market and if there were any price reductions.
Current Listings
Your competition consists of current listings. If possible, tour these homes to see what buyers are looking at. Note how you feel when you see these homes and try to replicate positive aspects in your own home.
Square Foot Cost Comparisons
Compare homes with similar square footage to get an accurate listing price. Appraisers usually compare homes within 10% to 25% of a given property’s square footage. Larger homes have a lower cost per square foot, and smaller homes have a higher cost per square foot.
Final Thoughts
After comparing similar homes, consider market trends. If the market is rising, you might list your home at a higher price. If it’s declining, you might list lower. Ultimately, you choose the listing price, but there’s no guarantee you’ll get it. Decide if time or money is more important to you when setting your price.
Getting Help
Many free tools are available to help with your CMA, including those from the Canadian Mortgage and Housing Corporation. Your best option might be to ask a real estate agent for a free CMA. They have valuable insights and can help you with every step of the selling process, from pricing to marketing to negotiating contracts.
If you’re looking for a complete real estate marketing and sales solution, consider working with a real estate agent to make the process easier and more efficient.
