How to Set a List Price for Your Chatham Home
Setting the list price for your home involves evaluating various market conditions and financial factors. As an experienced Chatham-Kent realtor, it is my job to help you set your list price based on:
- pricing considerations
- comparable sales
- market conditions
- offering incentives
- estimated net proceeds
Pricing Considerations – Find a Balance Between Too High and Too Low
When setting a list price for your home, you should be aware of a buyer’s frame of mind. Consider the following pricing factors:
- If you set the price too high, your house won’t be picked for viewing, even though it may be much nicer than other homes on the street. Believe it or not, pricing your home above a neighbouring listing is one of the fastest way to scare Chatham-Kent buyers away.
- If you price too low, you'll short-change yourself. Your house will sell promptly, yes, but you may make less on the sale than if you had set a higher price and waited for a buyer who was willing to pay it.
Tip: Never say "asking" price, which implies you don't expect to get it.
Price Against Comparable Sales in Your Neighbourhood
No matter how attractive and polished your house, buyers will be comparing its price with other comparable properties on the Chatham-Kent market.
Your best guide is a record of what the buying public has been willing to pay in the past few months for property in your neighbourhood. Realtors have unrestricted access to this information, and can furnish data on sales figures for comparable Chahtam-Kent listings. While it is my job to guide you through the pricing process, the decision about how much to ask is always yours.
Competitive Market Analysis (CMA)
The list of comparable sales supplied by a realtor, along with data about other houses in your neighbourhood that are presently on the market, are used to formulate a "Comparative Market Analysis" (CMA). A CMA is useful for Chatham-Kent home sellers because the analysis also includes data on nearby houses that failed to sell in the past few months. This will help ensure that you avoid making the same pricing mistakes as these properties. A CMA differs from a formal appraisal in several ways. One major difference is that an appraisal will be based only on past sales. Also, an appraisal is done for a fee while the CMA is provided by your realtor. For the average home sale, a CMA is a great tool for estimating the proper list price of your Chatham, Ontario home.
A formal written appraisal (which may cost a few hundred dollars) can be useful if you have unique property, if there hasn't been much activity in your area recently, if co-owners disagree about price, or if there is any other circumstance that makes it difficult to put a value on your home.
Tip: If you do order a market value appraisal, make it clear you don't need an elaborate, or full narrative report, i.e., the kind that's complete with photos of the house and neighbourhood. Floor plans and a site map is sufficient in most cases.
Market Conditions – Is it a Buyer’s Market or a Seller’s Market?
A CMA often includes a Days on the Market (DOM) value for each comparable house sold. When Chatham-Kent real estate is booming and prices are rising, houses may sell in a few days. Conversely, when the market slows down, average DOM can run into many months.
As an experienced realtor, I can tell you whether Chatham-Kent is currently in a buyer's market or a seller's market. In a seller's market, you can price a bit beyond what you really expect, just to see what the reaction will be. In a buyer's market, if you really need to sell promptly, offer an attractive bargain price.
If You Price High, Set a Schedule for Lowering the Price
Some sellers list at the rock-bottom price they'd really take, because they hate bargaining. Others add on thousands to the estimated market value "just to see what happens." If you want to try that, and if you have the luxury of enough time to feel out the market, I’d be happy to sit down with you and work out an advance schedule for lowering the price if need be.
If there haven't been many prospects viewing your home after three weeks, you may need to lower your list price. If that doesn't bring any prospective buyers, you may need to lower your list price again. Plan on doing that regularly until you find a level that attracts buyers. Make a written schedule in advance, before emotion takes over and you're tempted to dig your heels in.
Offering Incentives to Hasten a Sale
Sometimes cash incentives are as effective as lowering the price, especially in the lower price range where buyers may be "cash poor." You may offer to pay some or all of a buyer's closing costs and discount points required by the buyer's lending institution.
If you haven't had much traffic through your house and you’re in a hurry to sell, you may want to add the offer of a bonus to the selling broker, in addition to their commission. An example of the wording for such an offer may be "to the broker who brings a successful offer before Christmas."
Estimating Net Proceeds
Once you’ve been given an estimate of market value by your Chatham-Kent realtor, you can get a rough idea of how much cash you might walk away with when the sale is completed. This can be particularly useful when you start looking for another home to buy.
To estimate your net proceeds, from the estimated sales amount, subtract the applicable costs in the three sections outlined below: seller’s costs, buyer’s/seller’s costs and closing costs.
Seller’s Costs
Subtract the following costs as applicable.- payoff figure on your present loan(s)
- broker's commission
- prepayment penalty on your mortgage
- attorney's fees
- unpaid property taxes
Buyer’s/Seller’s Costs
Additionally, I can tell you whether local customs or rules dictate whether the buyer or seller pays for the items listed below. Subtract the following costs, as applicable.
- title insurance premium
- transfer taxes
- survey fees
- inspections and repairs for termites, etc.
- recording fees
- Homeowner Association transfer fees and document preparation
- home protection plan
- natural hazard disclosure report
Closing Costs
As far as closing costs are concerned, you and your eventual buyer may agree on any arrangement that suits you, no matter what local practice dictates. If you need help estimating these costs, please don’t hesitate to ask me.