Price Your Home Right | Negotiate

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We often hear home sellers say they “want”, or “need” a certain price for their home and then let that figure drive their decision on asking price. Unfortunately, a home seller’s “wants” and/or “needs” have absolutely nothing to do with the market value of their property. Your wants and/or needs may help determine whether you want to, or are able to, sell your home, but they in no way impact the selling price of your property.

The market value of your home is determined by the supply and demand for properties similar to your own. When supply exceeds demand, values go down, and when demand exceeds supply, values go up. There was a time, prior to the internet and, more recently, the ability of for-sale-by-owners to post their listing to the MLS® System, that exposure (or the lack thereof) could play an integral part in the eventual selling price of your home. Exposure is no longer a problem, even for the most ardent do-it-yourselfer, providing they’re willing to spend a small flat fee to advertise their home in the MLS® System.

Another commonly held misconception is that somehow REALTORS® and/or real estate brokerages can affect the market value of a property. This simply is not true. Buyers and sellers affect market value, not REALTORS®. REALTORS® don't attract offers... houses do! It is your house and the value you place upon it, that will determine whether or not you attract an offer. The goal when pricing your house is to do so such that you will attract offers. Rarely, in Alberta anyways, do mispriced houses attract an offer. The reason for this is that Alberta has a very efficient resale home marketplace. In other words, it has lots of activity. There are always many homes for sale, and plenty of buyers looking to buy. Over-priced homes generally get disregarded as buyers can usually find properly priced homes that they like.

If you are unsure about choosing the correct list price for your home, we highly recommend that you choose our Expert Package and obtain an Opinion of Value from one of our experienced local licensed REALTORS®. In order to arrive at their Opinion of Value, your rhinoagent will prepare a Comparative Market Analysis (CMA) of your home using similar properties that have recently sold and those that are currently for sale. They may choose to communicate with other REALTORS® that have recently sold properties in your area for even more detailed information. Their professional interpretation of this data will allow you to choose the correct price for your home based on the current market conditions. You will benefit from our experience and expertise at this most crucial stage of the selling process.

Another route you can go in order to correctly price your home is to hire a professional licensed appraiser. The cost of this service is several hundred dollars and the appraiser will use the exact same information that our REALTORS® use. Generally speaking, in Alberta, home owners do not use these services to price a home. These services are frequently used by financial institutions for lending purposes and they are also quite prevalent in the commercial real estate market. Appraisal services are available to individual residential home owners should you wish to pay for such a report.

How about just “picking” a price on your own? As it is a common problem that homeowners, when left to their own devices, will generally over-price their properties and consequently adversely affect their sale, we do not recommend this course of action unless you feel absolutely certain in your abilities to get it right. Naturally you want top dollar for your home, but you do not want to scare off potential buyers by setting your price too high.

We’ve talked about market value and what influences that, however, you need to be aware that “market value” and “negotiated sale price” are two different things. The difference being, that market value generally refers to a value range, for example, your home’s market value could be described as being between $425,000 and $440,000, whereas the negotiated sale price is a single figure, say $437,000.

So what influences the negotiated sale price of your home? Largely, it comes down to two things, motivation and negotiating skills.

First, the motivation of the individual buyer that has placed an offer on your home can influence this figure. For example, Buyer “A” may like your house better than, or need to buy sooner than, Buyer “B”, so even though both buyers may be prepared to submit an offer on your home, Buyer “A” will likely be prepared to pay a little more than Buyer “B”. Your own motivation, as the home seller, may also impact the negotiated sale price. Holding to a price can be difficult to do under certain circumstances, and ultimately may affect the eventual agreed upon price.

The second factor that can largely influence the negotiated sale price of your home is the respective skills of the two people involved in negotiating the purchase contract. There is little question that thousands of dollars can move one way, or the other, depending on who is negotiating for each side. It is probably safe to say that for an average priced property in Alberta today, a minimum of five thousand dollars ($5000), and at times, much more, is “up for grabs” during the purchase contract negotiations. As such, unless you are absolutely confident in your own abilities and skills to expertly negotiate all that can be had from any individual buyer and/or buyer’s agent, we highly recommend you consider signing up for rhino’s NegotiAid® services. NegotiAid® lets you be in control of the sale of your home, while at the same time having an experienced real estate negotiator on your side and ensuring that all the paperwork is in order.

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