Pricing : Hawkesbury Area Real Estate

Anthony Beck

REALTOR®
Licensed in Ontario, Canada

Pricing Determinations?

Pricing a listing is critically important. Over-pricing is typically more costly to the seller than low pricing. It’s easy to look up how much money you have in your savings account or the real-time value of your stock investments. But determining the dollar value of a home is trickier.

As a seller, knowing your home’s worth helps you price it correctly when you put it up for sale. By pricing it too high, it may sit on the market. After a brief introductory period it starts to LOOSE value. But pricing it low and you may be losing out on a good chunk of money (nobody wants that!). More likely you may spark a pricing war or quickly get serious offers. For buyers, it’s important to know a home’s worth before you make an offer. You want your offer to be competitive, but you don’t want to overpay for the property.

Even if you’re not a buyer or seller right now, as a current homeowner you might just be curious about the value of your home. Keeping track of your home’s worth year over year helps you understand the trends in your market. So when you are ready to sell, you can take advantage of a good window of opportunity.

The good news is, a trained real estate agent—who understands the nuances of your particular neighbourhood—can estimate the true market value of your property. He’ll do it at no cost to you!

THE THREE TYPES OF HOME VALUES

When you start the process of buying or selling a home, you’ll frequently hear three types of home value. Appraised value, assessed value, and true market value. It’s important to know the difference between each one so you can make better, informed decisions.

Appraised Value

A professional appraiser is in charge of determining the appraised value of a home. These appraisals are typically required by a lender when a buyer is financing the property. And while the lender is the one requiring this information, the appraiser should not work for the lender.¹ Your appraiser should be objective. He is a licensed professional who doesn’t have allegiance to the buyer, seller, or lender—no matter who is paying their fee.

The number the appraiser comes up with (the appraised value) assures the lender that the buyer is not overpaying for the property. For example, imagine a seller lists a home for $400,000. They reach a deal with the buyer to sell the home for $375,000. However, if an appraiser evaluates the property and determines that the appraised value is actually $325,000, then the lender may not lend for an amount higher than that appraised value of $325,000.²

When figuring out this number, an appraiser will compare the property to similar homes in your neighbourhood. They’ll adjust for factors such as location, square footage, appliances, upgrades, improvements, and the interior and exterior of the home.

Assessed Value

The assessed value of a home is determined by your local municipal property assessor. This value matters when your county calculates property taxes each year. The lower your assessed value, the less property tax you’ll pay.³

To come up with this value, your assessor will evaluate what comparable homes in the neighbourhood have sold for, They consider the size of your home, age, overall condition, and any improvements or upgrades that have been made. However, most assessors don’t have full access to your home, so their information is limited.

Assessments are done annually to determine how much property tax you owe. Many counties use a multiplier (typically between 60%-80%) to calculate the final assessed value. So, assuming the assessor determines that the value of the home is $300,000, if the county uses a 70% multiplier, the assessed value of the home is $210,000 for tax purposes.⁴

If your assessed value isn’t as high as you envisioned, don’t sweat it. Many homeowners appeal their assessment in favor of a lower valuation so that they can save money on property taxes. If you’re interested in appealing your property tax assessment, let us know. We offer complimentary assistance and would be happy to help you build your case.

True Market Value,- The Basis for Good Pricing

True market value is estimated by your real estate agent. It basically refers to the value that a informed buyer is willing to pay for the property. A good real estate agent is an expert in estimating true market value. They apply their hands-on experience buying and selling properties. Understand the mind sets of buyers in your market. Knowing what they’ll pay for a desirable house, townhouse, or condo. However at times of rapid price increase this is very hard to assess.

As a seller, knowing your true market value is important. It helps you pricing your property. Also, it can also help you decide if you want to make any improvements to your home before putting it on the market. Your agent can help you figure out which updates and upgrades will have the biggest impact on your selling price.

WHAT’S THE DEAL WITH ONLINE CALCULATORS?

Some popular real estate sites like Zillow, Redfin, and Trulia also value your property. This is just an estimate frequently based on inaccurate information. It’s not an actual appraisal or the “true market value.” These sites all have their own algorithms for coming up with their estimates. For example, Zillow comes up with their “Zestimates” by calculating “public and user-submitted data, Its taking into account special features, location, and market conditions.” ⁵

These online estimates can be a great starting point for opening up the conversation with your real estate agent about your home’s worth. But even Zillow recommends that you use a real estate agent for coming up with the actual market value of your home. The site says that once you get your “Zestimate,” you should still get “a comparative market analysis from a real estate agent.”

Having an agent involved in this process is essential because they understand the market better than a computer ever could. They’re showing property in your area every single day, and they know the particular preferences of buyers and sellers in the area. Young professionals, large families, empty nesters, and other groups are all looking for different things in a home. A local agent has most likely worked with all of them, so they understand what every segment in your market is specifically looking for.

HOW AN AGENT ESTIMATES YOUR HOME’S TRUE MARKET VALUE

So, how does an actual real estate agent estimate true market value? They’ll start by doing a comparative market analysis (CMA). This means they’ll compare your home’s features to similar properties that have sold, are on the market or failed to sell, in your area. For the CMA, the agent looks at the below factors to influence their assessment of your home’s worth:⁶

Neighbourhood sales – Your agent will look at similar, recently sold homes in your neighbourhood to see what they sold for and what they have in common with your house.
The exterior – What does your home look like from the outside? Your agent will factor in curb appeal, the style of the house, the front and backyard, and anything else that impacts how the house looks to everyone walking and driving by.
The interior – This is everything inside the walls of the house. Square footage, number of bedrooms and bathrooms, appliances, and more all influence the overall market value.
Age of the home – Whether you have a newer or older home affects the number your agent comes up with as part of their assessment.
Style of the home – The style of your home is important because buyers in different markets have different tastes. If buyers prefer ranch-style homes and you have one, then your home may sell for a premium (aka more money!).
Market trends – Because a local agent has so much experience in your market, they have their finger on the pulse of your area’s trends and know what buyers are willing to pay for a property like yours.
Location, location, location – This one’s probably the most obvious. Your agent will think about how popular the area is, how safe it is, and what schools are like.

A computer algorithm simply can’t take all of these factors into account when calculating the value of your home. The reality is, nothing beats the accuracy of a real estate agent or professional appraiser when it comes to determining a home’s true market value.

YOUR AGENT IS THERE EVERY STEP OF THE WAY

Determining a home’s true market value is a real estate agent’s forte. If you’re a seller, your agent will suggest your home’s market value and recommend pricing.

For buyers, your agent will help you determine the value so you can come up with a fair offer. Your agent can also set up a personalized home search on the Multiple Listing Service (MLS) for you so you’ll receive emails of listings that meet your criteria. This will help you see what’s out there in your city and the relative pricing of properties.

Get a Complimentary Report With Your Home’s True Market Value

Curious about your home’s true market value? Call me to request a free, no-obligation Comparative Market Analysis to find out how much your home is worth!

Of course, buyers won’t pay for the sentimental value you place on your house. But special features such as hardwood floors, a newly renovated kitchen or bathroom, or a beautiful backyard patio can have an impact on how quickly a property sells and for what price. I’ll help you understand all the factors that go into setting the list price, and ensuring it is just right for the marketplace and your goals.

Curious as to what your house is likely to sell for in today’s market? Please Contact me for a no-obligation Personal Consultation. I’ve got the answers for you.