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If most Waterloo Region home sellers were to be sensible and honest with themselves they would admit that they really should not be the ones to select an initial listing price for their home for sale because, to be frank, they are not in the real estate business.
On the other hand however, maybe they should be setting the initial listing price, as they own the home, they know the home, and they do, after all, have a huge stake in the place. However, owning and being familiar with your home and understanding its true value on the open market are usually two completely different things.
Something that often complicates things even further is that some home sellers base their decision regarding who to hire as a Waterloo Region listing agent based on which of them suggests the highest initial listing price for their home, as though somehow the agent has magical powers and secret spells to sell the home for more money than the agent who suggests a reasonable list price.
Sellers often don’t realize that list price, when everything else is stripped away, is fairly immaterial and unimportant. The list price is important only to the extent that it could attract or deter a potential home buyer. It is the sales price and the subsequent appraised value that carry more weight.
So what are those top three mistakes mentioned in the title? Here is what we find they are based on our experience:
Mistake #1: Selecting a Sales Price on How Much a Seller Wants or Needs
It truly does not matter how much a seller thinks he or she needs to get for the home because sales prices are not based on sellers’ needs or desires. Sellers either choose to fall in line with what the market will currently bear or they don’t sell the home right now.
That may sound harsh, but it’s true. The market value of a Waterloo Region home dictated by how much a buyer is willing to pay and, if the buyer is relying on financing to complete the sale, how much the appraiser believes the home is worth. What agents hope for or the sellers want makes no difference in the real world.
Mistake #2: Basing Your Listing Price On Your Neighbours
People tend to remember the sales price of a home when it was initially listed more so than the sales price at closing. The for sale sign goes in the yard, fingers fly to the keyboard, and there is your neighbor’s home online in all of its glory priced way beyond anything you ever hoped to receive. However, the price the home is listed at and the price it eventually sells for can be very different.
In a seller’s market, the home might sell above list price. In a buyer’s market, the home could sell below market value. There is also the state of the home to consider, its upgrades, it’s flaws (real or perceived) deficiencies discovered during a home inspection – all things that can affect the final sales price.
The only type of comparable sale that is significant when choosing a listing price is a sold home of similar size, layout, condition, and location. And typically an appraiser will use three comparable sales at a minimum and prefer six. A neighbour can list a home for a trillion dollars if they like but it has no bearing on actual value.
Mistake #3: Basing a Sales Price on Average Square-Foot Costs
In some areas , single-level homes are more desirable than two- to three-story homes, and although the square footage of those homes could be identical, a single-level home might sell at a higher per-square-foot cost. So basing a listing price on measurements alone is rarely a good idea either.
The basic lesson here? Work with a Realtor who will work with you to determine a realistic initial listing price for your home and will explain their rationale to you regarding the pricing they suggest.