How do we, as Realtors, really price your home? That’s the question on everyone’s lips as they try to pin down what their home is really worth. No two agents are alike in the processes and skill sets they use, so I can only vouch for what we do here at the Williams and Follows Group.
- We pull up the history of your home to check on it’s current status i.e. when it last sold, when it was built, who is on title and any red flags this information may present. For instance, if it was built in the 70’s we may have an issue with aluminum wiring or if it’s a country property that’s older or hasn’t sold in many years we have septic and well issues to investigate. Zoning is another status we want to know and also if there are environmental protections or other issues to uncover. Anything and everything can affect the pricing so we need to dig as deep as possible.
- Research sales on the street. These are the closest comparables geographically and need to be considered. We’ll make adjustments for differences in the homes that have sold, like lot size, size of home, number of bedrooms and washrooms, finished or unfinished basements, upgrades to the home and more.
- Then we look at the immediate neighbourhood for more sales. Location to schools, transportation, shopping and amenities all play a part. In the country, acreage and type of land is important along with other buildings on the property.
- Next we’ll look at the community as a whole. Here we want to determine supply and demand, or “churn rate” as we like to call it. How much inventory is on the market, how much has sold over the last 30 days and how many buyers are currently in the market?
- We pull a Property Detail Report. This gives us information on the home & property such as year built, frontage, water & sewer supply, number of bedrooms & washrooms, assessment info, zoning, legal description and more. This information must be cross-referenced as it’s not always correct. Changes could have been made that were either not done with permits or were never reported. We also get an aerial outline of the property.
- We also pull a GeoWarehouse report. There’s a ton of info here like who the registered owners are on title, sales history, lot size, assessed value, aerial and satellite views, comparable listings, ownership type, property type and most importantly, demographic information on the neighbourhood, community and city/town. This is used when we’re designing targeted marketing for the property and determining who the most likely target audience is.
- We pull an AVM report. AVM stands for Automated Valuation Method Report and is a product of MPAC. It’s also a report a lender might use. Other products outside of MPAC include Emily and Purview but Realtors can pay for an AVM report. Only mortgage brokers and lenders can access the other reports. This report will give a valuation as of the date it’s pulled, along with a confidence rating and 3 comparables, (there are more in the background that the algorithm pulls from). It also provides an upper and lower range because, let’s face it, when prices are escalating or de-escalating quickly, these algorithms can’t keep up. Sometimes these valuations aren’t entirely accurate which is why you need to have other metrics going into your valuation.
- We also pull a Home Price Index Price Estimate. This can only be done if the home was purchased 2000 or later, in the GTA. There is now a similar tool in other areas but it isn’t quite as detailed nor does it go that far back. This report takes the type of home you own, the location of the home, when you bought it and what you paid and extrapolates the data across the years to give you a present-day price estimate. We compare this number to the other numbers we have from other reports and recent, comparable sales. When you’re pulling information from 3 or 4 different sources you should see a consensus value beginning to line up.
- On-site visit – leaving all the numbers and data behind we want to walk through the property to see it first-hand. Homes can vary dramatically depending on how they’ve been maintained and upgraded over the years. We not only want to view the positives about the property, we want to make ourselves aware of any negatives. If we can address or remove any negatives it’s going to help the price the Seller gets so this is a really important step.
- We determine what needs to be done to improve the presentation and saleability of the home to achieve the highest price possible and come up with a plan in conjunction with the homeowner. This can include anything from a simple cleaning to repairs and/or renovations.
- Finally – strategy. What’s going to be the pricing/marketing strategy out of the gate. We know how to do our job to net the most amount of money for our clients. Our sales statistics prove that time and time again, however, we do not own the property, so this is a discussion between us and the homeowners and it’s a critical discussion. Sometimes homeowners have their own, very legitimate fears and concerns and these need to be addressed. There needs to be a comfort level, a meeting of the minds with everyone on the same page moving forward together with the same goals.
Some realtors may only look at recent comparable sales when pricing a home for the market. We just don’t feel that is sufficient enough background in order to do the very best job for our clients. When we are pricing a property we’re also setting the stage for negotiation.
So why do agents under-list properties or list them below market value? That’s the trend we’ve seen in this latest market, over the past year or so with almost every home selling above the asking price by huge amounts. It’s a very good question and is going to deserve a separate discussion. Watch for our next blog.
If you’re thinking of selling in the next 3 – 6 months, please give us a call to find out the true value of your home. Call Lisa or Keith to get started at 905-442-5847 today!