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How to Set an Offer Price

There is no set equation to determine how you’ll reach an offer price. Rather, the process involves a range of research and comparison that will vary with each situation. You’ll need to look at sales of comparable properties, and factor in additional data such as the condition of the property, the current market, and seller circumstances. With this information in hand, you will be able to determine a fair price range and, from there, establish the price you’re willing to offer.  Making sure your offer is fair and reasonable is an important first step in the negotiation process when buying a home.

Concentrate on the following areas to help you determine an offer price:

Comparable Sales

  •  Compare prices of homes that are similar to the property you’re considering in the following areas: number of bedrooms and bathrooms, square footage, lot size, type of construction, and garage space.
  •  The most comprehensive and in-depth information can be accessed through the Multiple Listing Service (MLS). Your Realtor, who will be working closely with you to set your offer price, can help you navigate this service.

Property Condition

  • Observe how the property compares to the rest of the neighborhood. Is it average, above average, or below average?
  • Look at structural condition: walls, ceilings, windows, floors, doors.
  • Pay close attention to: bathrooms, bedrooms, condition of plumbing and electricity.
  • Also check the fixtures: light switches, doorknobs, drawer handles, etc.
  • What is the condition of the front and back yards?

Home Improvements

  • Cosmetic changes can be largely ignored, but any major improvements should be taken into account.
  • Take special note of: room additions (especially bedrooms and bathrooms).
  • Items such as swimming pools may be taken into account, but usually won’t affect your offer. Your Realtor can offer your guidance in these matters.

Market Conditions

Seller’s Market:
A seller’s market is considered a “hot” market. This type of market is created when demand is greater than supply—that is, when the number of Buyers exceeds the number of homes on the market. As a result, these homes usually sell very quickly, and there are often multiple offers. Many homes will sell above the asking price.

Buyer’s Market:
A Buyer’s market is a slower market. This type of market occurs when supply is greater than demand, the number of homes exceeding the number of Buyers. Properties are more likely to stay on the market for a longer period of time. Fewer offers will come in, and with less frequency. Prices may even decline during this period. Buyers will have more selection and flexibility in terms of negotiating toward a lower price. Even if your initial offered price is too low, Sellers will be more likely to come back with a counter-offer.

 Balanced Market:
In a balanced market, supply equals demand, the number of homes on the market roughly equal to the number of Buyers. When a market is balanced there are not any concrete rules guiding whether a Buyer should make an offer at the higher end of his/her range, or the lower end. Prices will be stable, and homes will sell within a reasonable period of time. Buyers will have a decent number of homes to choose from, so Sellers may encounter some competition for offers on their home, or none at all.

Comparable sales information helps you establish a price range for the home you’re interested in. Adding in the additional factors mentioned above will guide your decision of whether you consider a “fair” price to be near the upper or lower limit—or the middle—of that range. Keep in mind, this price should be the one you’d be happy with once all negotiations are said and done. The price you decide to begin with depends on your particular style of negotiation. Most Buyers begin the negotiation process with a number lower than the “fair” price they’ve come up with.

Preparing Your Home For Showing

“You never get a second chance at a first impression.” We’ve all heard this expression before. And now, while you are preparing your house to sell,
it should not be far from your mind.

While logical factors such as price and location narrow the pool of houses a potential buyer will look at, the ultimate decision to buy a particular house is fuelled
by a mixture of logic and emotion, and emotion often wins out. The same might be said for the process of selling a home. For this reason, Real Estate Agents, when they talk to you
about buying real estate, will refer to your purchase as a “home.” When discussing the sale of your current home, however, an agent will refer to it as the “house.”
This is a conscious choice. The agent knows that buying a house is often an emotional decision, while, when selling a house, emotion should be separated from the process.

Buyers are searching for a “home”—a place in which they will feel comfortable, secure, and happy, a place in which they can imagine settling down and raising their family. As a seller, your goal is to cultivate these feelings through the property you’re selling. Look at your house as a marketable commodity. A buyer’s emotional response is triggered early, so you want to ensure you have done everything you can to encourage a positive response to your house from the outset.

Within minutes—even seconds—of pulling into your driveway, buyers have formed an impression that they will carry with them through the rest of the showing, and beyond. Keep in mind, this impression will not only influence whether or not they make an offer, but also what they consider to be the value of the property.

If you’ve ever visited model homes, you’re familiar with effective presentation styles. Have you ever walked into one of these homes and immediately begun taking stock, planning how to get your home to look that good? Well, now is the time to take some of these steps. Of course, there are ways to achieve the same effect in your own home without incurring model home costs. When homes create this immediate type of emotional appeal, they tend to sell quickly and for more money. Use the following step-by-step guide to get your house into selling shape before you put the property on the market, and you’ll be well on your way to a successful sale!

1. Depersonalize.

This should be one of your first steps when you begin preparing your house to sell. Over the years, a home inevitably becomes tattooed with the owners’ lives, covered with touches that have made it that special place for you. At this point, however, you want buyers to recognize it as a property they could make into their unique place. When a home buyer walks into a room and sees these personalizing touches—such as photos on the walls or trophy collections—their ability to picture their own lives in this room is jarred, impairing a positive  motional response. So, your first step will be to remove all the family photos, the trophies, collectible items, and souvenirs. Pack them all together, so you’ll have everything you need at your disposal when it comes time to personalize your new home. For the time being, rent a storage space and keep these items there. Do not simply transfer these items to another place in your house. Do not hoard them away in a closet, basement, attic, or garage, as the next step in preparing your home is to minimize clutter—and these areas of your house will all be targeted.

2. Remove All Clutter.

The next step on the list is to purge your house of the excess items that have accumulated over the years. This is the hardest part for many people, as they have an emotional investment in many of these things. When you have lived in a house for several years, a build-up of personal effects occurs that is often so gradual that you don’t notice the space is becoming cluttered. If you need to, bring in an objective friend to help point out areas that could stand to be cleared. Try to stand back yourself and see your house as a buyer might. Survey shelves, counter tops, drawers, closets, the basement—all places where clutter often accumulates—to determine what needs to go. Use a system to help you decide: get rid of all items, for example, you haven’t used in the past five years, and pack up everything that you haven’t used in the past year. Although getting rid of some things might be hard, try to do it without conscience or remorse. You’ll be forced to go through this process anyway when you move, and with each box you eliminate, your storage space—and the room in general—begins to look larger. We’ve broken down the process into specific areas of your house to help you concentrate your efforts:

Kitchen:

The kitchen is an ideal place to begin, as it’s easy to spot and eliminate the type of clutter that tends to accumulate here. Home buyers will open your drawers and cabinets as they’ll want to check if there will be enough room for their own belongings. If the drawers appear cluttered and crowded, this will give them the impression there is not enough space.

  • First of all, remove everything from the counters, even the toaster (the toaster can be stored in a cabinet, and brought out when needed).
  • Clean out all the cabinets and drawers. Put aside all of the dishes, pots and pans that you rarely use, then box them and put them in the storage unit you have rented (again, not in the basement or a closet).
  • If you, like many people, have a “junk drawer,” clear this out.
  • Get rid of the food items in the pantry that you don’t use. Begin to use up existing food—let what you have on your shelves dictate your menus from now on.
  • Remove all extra cleaning supplies from the shelves beneath the sink. Make sure this area is as empty as possible. You should thoroughly clean this spot as well, and check for any water stains that might indicate leaking pipes. Buyers will look in most cabinets, and will notice any tell tale signs of damage.

Closets:

  •  Go through all clothes and shoes. If you don’t wear something any more, get rid of it. We all have those clothes, too, that we wear only once in awhile, but can’t bear to give away. Box these items and keep them in the storage unit for a few months.
  • Go through all other personal items in the closet. Be ruthless. Weed out everything you don’t absolutely need.
  •  Remove any unsightly boxes from the back of the closet. Put them in storage if need be. Get everything off the floor. Closets should look as though they have enough room to hold additional items.

Furniture:

  •  You may want to tour a few model homes in order to gauge the type of  furniture chosen by design teams to create a spacious, yet comfortable atmosphere. Note how that furniture is arranged to cultivate a certain feeling.
  • After having armed yourself with some ideas, stand back and look at each of your rooms. What will you need to remove? Remember, most homes contain too much furniture for showings. These are items that you’ve grown comfortable with and that have become incorporated into your everyday routine. However, each room should offer a sense of  spaciousness, so some furniture will likely need to be placed in storage.

Storage Areas:

  •  Basements, garages, attics, and sheds: these are the “ junk yard” areas of any given home. It is possible to arrange simple clutter into a certain order, but junk is sent packing to these often-hidden rooms. First, determine which of these boxes and items you actually need. Can some of it be sent to the dump once and for all?
  • Hold a Garage Sale. You’ve heard the saying, “One person’s trash is another’s treasure.” Let these items go to a better home.
  • Transfer some items to the rental storage unit. You’ll want to clear the storage areas in your house as much as possible, in order for them to appear spacious to potential home-buyers. Buyers want the reassurance that their own excess belongings will find places for storage in their new home.
The Best Asking Price For Your Home

Setting a realistic price for your home that reflects current market values will help sell your home quickly and for top dollar. When you price your home properly, you increase
the chances that the offer you receive will nearly match your asking price, and that there will be competing offers—which may net you even more in the long run.

Your property has the best chance of selling within its first seven weeks on the market. And, studies indicate that the longer a property stays on the market, the less it will ultimately sell for. A property priced 10 % more than its market value is significantly less likely to sell within this window than a property priced close to its actual market value. About three-quarters of homes on the market today are 5-10 % overpriced.  Sellers will usually over-price their homes by this margin if, either, they firmly believe the home is worth more than what the market indicates, or if they want to leave room for  negotiation. Either way, if you choose to over-price your home by this amount, you run  the risk of increasing the amount of time your home spends on the market, and decreasing  the amount of money you’ll ultimately receive.

At the other end of the selling spectrum are houses that are priced below a fair market  value. Under-pricing often occurs when the owner is interested in a quick sell. You can bargain on these homes attracting multiple offers and ultimately selling quickly at—or above—the asking price.

The knowledge and skills of the Realty Brothers will be invaluable when determining an appropriate asking price. It is the job of the Realty Brothers to know the current market and market trends inside and out, to be closely connected to the real estate market at large, and to be aware of other properties currently for sale in your particular area. Based on this range of connections and knowledge, your Realty Brothers will counsel you on how to price your home properly in order to attract the highest price possible, in the shortest period of time.

Before approaching this process, you should first do some homework yourself. You’ll need to know the workings of the current market before you even begin to think about setting an asking price. The market will always influence a property’s value, regardless of the state of a home, or its desirability.  Here are the types of market conditions and how they may affect you:

1. Seller’s Market:

A Seller’s market is considered a “hot” market. This type of market is created when demand is greater than supply—that is, when the number of Buyers exceeds the number of homes on the market. As a result, these homes usually sell very quickly, and there are often multiple offers. Many homes will sell above the asking price.

2. Buyer’s Market: 

A Buyer’s market is a slower market. This type of market occurs when supply is greater than demand, the number of homes exceeding the number of Buyers. Properties are more likely to stay on the market for a longer period of time. Fewer offers will come in, and with less frequency. Prices may even decline during this period. Buyers will have more selection and flexibility in terms of negotiating toward a lower price. Even if your initial offered price is too low, Sellers will be more likely to come back with a counter-offer.

3. Balanced Market:

In a balanced market, supply equals demand, the number of homes on the market roughly equal to the number of Buyers. When a market is balanced there aren’t any concrete rules guiding whether a Buyer should make an offer at the higher end of his/her range, or the lower end. Prices will be stable, and homes will sell within a reasonable period of time. Buyers will have a decent number of homes to choose from, so Sellers may encounter some competition for offers on their home, or none at all.
Remember, a Realtor is a trained to provide clients with this information about the market, helping you make the most informed decision possible. The Realty Brothers will guide you through the ups and downs of the market and keep you up-to-date with the types of changes you might expect.

Evaluate your house in the other main areas that affect market value:

1. Location:

The proximity of your home to amenities, such as schools, parks, public transportation, and stores will affect its status on the market. Also, the quality of neighbourhood planning, and future plans for development and zoning will influence a home’s current market value, as well as the ways in which this value might change.

2. Property:

The age, size, layout, style, and quality of construction of your house will all affect the property’s market value, as well as the size, shape, seclusion and landscaping of the yard.

3. Condition of the Home:

This includes the general condition of your home’s main systems, such as the furnace, central air, electrical system, etc., as well as the appearance and condition of the fixtures, the floor plan of the house, and its first appearances.

4. Comparable Properties:

The Realty Brothers will prepare you a general market analysis of your neighbourhood, so you can determine a range of value for your property. A market analysis will provide you with a market overview and give you a glimpse at what other similar properties have been selling for in the area.

5. Market Conditions/ Economy:

The market value of your home is additionally affected by the number of homes currently on the market, the number of people looking to buy property, current mortgage rates, and the condition of the national and local economy.

How to Get Top Dollar For Your Home, Fast!

Your home is likely your largest asset, so selling it may be the biggest financial move you’ve ever made, one that requires significant thought and strategy. However, once you’ve entered the market, the process may move very quickly: your property has the best chance to sell within its first seven weeks on the market. Studies indicate that the longer a property stays on the market, the less it will ultimately sell for. So, you need to ensure you’re ahead of the game. Get your property into top selling shape before it hits the market in order to increase its chances of selling within the desired window of time  and drawing top dollar.

Use the following tips to seize control of the home-selling process before you begin:

1. Establish the Reasons you Want to Sell your Home:

These reasons will direct the path you take in the home-selling process. If, for example, you have already purchased a new home and your goal is to make a quick sale on your current home, this reason will chart your approach. If, on the other hand, you aim to net the highest price possible for your home, you would need to prepare yourself for a potentially slower process. Be clear about these reasons, as they will directly influence the amount of time and effort you put into preparing your home for sale, and the amount you set for your asking price.

2. Pricing:

It is essential you list your property at a competitive market value right from the start. The competitive nature of the market means that over-pricing by a few thousand dollars could make the difference between your home selling quickly or not selling at all. Overpricing your home could potentially yield the following results: minimized offers, fewer showings, fewer agent responses, limited  financing, limited buyers qualified for your type of home, or a smaller net price. You can avoid these outcomes by setting the price of your home at its market value when you first list. If you are unsatisfied with the current market value of your home and unwilling to list it as such, consider putting off the sale of your home at this time.

3. Do your Homework:

Perhaps the most “hands-on” approach to educating yourself about the nature of the current market—what works and what doesn’t—is to explore other homes on  the market. Take advantage of Open Houses in your area, particularly in those homes similar to your own. Take some notes. Observe floor plans, lot size, appearance, location, and other features of the property. Then compare asking prices. Go through this process before setting your own asking price. Remember: you want to get a selling price as close to your asking price as possible.  And if  you want to attract this price quickly, you won’t accomplish this by setting your price higher than your neighbour’s.

4. Decide Whether to Invest in an Appraisal:

Getting an appraisal can be a positive or negative move, depending on the outcome. It’s up to you to determine how it might fit into your personal plan. Having an appraisal done can be a good marketing strategy, indicating to potential buyers that your home can be financed, which will increase the chances that your home will sell quickly and for more money. On the other hand, however, there’s no guarantee you’ll like the final picture offered by the appraisal. Also, it’s one more cost you’ll have to add to your budget, and an appraisal only lasts for a  limited period of time.

5. Choosing a Realtor:

Your choice of Realtor will greatly influence your home-selling experience. For better or for worse, this person will be with you every step of the way during one of the largest financial ventures of your life—and will make a difference in the speed with which your house is sold, and how much it sells for. Don’t take this relationship lightly. You should consider a few Realtors before you narrow down your choice. Of course, one of the initial factors to consider will be whether the Realtor’s personality and enthusiasm is a fit for you and your family. Also, each candidate should be able to provide you with information on the following areas: the length of time s/he has been involved in residential real estate in your area, the marketing strategy s/he would use to sell your home, details on other properties in your area their company has sold (how much the property sold for and how long it spent on the market), and his/her philosophy or method of negotiation. You might want to request a reference list of former clients as well. Choose a few names on the list and call them.

6. Cleanliness:

Make no mistake, prospective Buyers will be turned off by even a minimal lack of  cleanliness, or an odour. Sellers may lose thousands of dollars if they fail to thoroughly clean the house before they begin to show it. Begin by clearing the house of excess junk, clutter, and furniture. Create more space. Make every room sparkle. Eliminate odours. You may be the last to notice a peculiar odour in your house, but it may be the first thing a potential Buyer notices. So, air out your house prior to showing. Keep pets in the yard as much as possible, and send any household smokers outside.

7. Access to your Home:

Agents will be more reluctant to show your home if it isn’t readily accessible.  They don’t want to waste their time running around, picking up and dropping off  keys. Rather, a key should be immediately available for agents at all times. Also, go through the following last-minute list to prepare for showing your home: keep all lights on, doors unlocked, and drapes and shutters open. If you can, leave the house while it is being shown. Head to the local coffee shop, or take the kids to the park. Prospective Buyers will feel more intrusive if the owner of the house is present while they are viewing. If you can’t leave the house, be as unassuming as possible.

8. Updated Interior:

A fresh coat of paint may be one of your best investments when preparing your home for the market. New paint can take years off the appearance of your home, dramatically increasing its perceived value. Likewise, if your carpeting appears worn, old, or is an outdated pattern, consider replacing it. The carpet or paint in one room could be the difference between a successful sale and your home being overlooked.

9. Drive-Up Appeal:

If the buyer doesn’t like the outside of your house, s/he may choose to skip it entirely. It is essential that your home possess a certain “drive-up appeal.” Remember, a potential buyer’s first impression of your house is formed while s/he is still sitting in the realtor’s car. Ensure the trees are trimmed, the walkway swept, the lawn cut. Paint the door, and put out a new, plush door mat. All of these little things will contribute to the overall effect of a well cared-for and welcoming home.

Buying a Home: What Expenses to Expect

Budgeting for a new home can be tricky. Not only are there mortgage installments and the down payment to consider, there are a host of other—sometimes unexpected—expenses to add to the equation. The last thing you want is to be caught financially unprepared, blindsided by taxes and other hidden costs on closing day. These expenses vary:  some of them are one-time costs, while others will take the form of monthly or yearly installments. Some may not even apply to your particular case. But  it’s best to educate yourself about all the possibilities, so you will be prepared for any situation, armed with the knowledge to budget accordingly for your move. Use the following list to determine which costs will apply to your situation prior to structuring your budget:

1.  Purchase offer deposit.

2.  Inspection by certified building inspector.

3.  Appraisal fee:  Your lending institution may request an appraisal of the property. The cost of this
appraisal is your responsibility.

4.  Survey fee:  If the home you’re purchasing is a resale (as opposed to a newly built home), your lending institution may request an updated property survey. The cost for this
survey will be your responsibility and will range from $700 to $1000.

5.  Mortgage application at your lending institution.

6.  GST: this fee applies to newly built homes only, or existing homes that have recently undergone extensive renovations.

7.  Legal fees:  A lawyer should be involved in every real estate transaction to review all paperwork. Experience and rates offered by lawyers range quite a bit, so shop
around before you hire.

8.  Homeowner’s insurance: Your home will serve as security against your loan for your financial institution. You will be required to buy insurance in an amount equal to or greater than the mortgage loan.

9.  Land transfer (purchase) tax:  This tax applies in any situation in which a property changes owners and can vary greatly.

10. Moving expenses.

11.  Service charges: Any utilities you arrange for at your new home, such as cable or telephone, may come with an installation fee.12.  Interest adjustments.

13.  Renovation of new home: In order to “make it their own,” many new homeowners like to paint or invest in other renovations prior to or upon moving in to their new home. If this is your
plan, budget accordingly.
14.  Maintenance fees: If you are moving to a new condominium, you will likely be charged a monthly condo fee which covers the costs of common area maintenance.