It’s not always easy to understand how Calgary home values are determined. There is, however, a criteria used by experts to arrive at the correct property value. Since these aspects dictate the value of your asset, it is important to know what they are.
Location of Your Home
The location of your property is a very important component that affects its real estate market value. For business assets, location is important because it determines the prospective income. A busy location will raise the value. This also applies to residential properties. The closer your property is to a business area, the higher the value. If your home is situated in an affluent neighbourhood, its value generally increases.
Amenities in Your Home and the Surrounding Area
The surrounding environment also plays a key role. Some people may prefer their homes near emergency sources such as a fire station or a police station. Others would like to be closer to learning institutions while others would prefer to be closer to shopping centres and malls.
The Physical Attributes of the Home Itself
Besides the location of your property, you should also consider its physical attributes, its total area, the wall structure, the number of rooms and the flooring. The outside of the home should also be appealing.
Property Values of Nearby Homes and Comparable Homes
One of the most important things that will determine the real estate property value is the value of other properties in the area. This is in fact a key factor in determining the worth of any house or property in Calgary.
The Biggest Pricing Mistake Homeowners Make
Price is the MOST important factor to consider when selling. So when pricing a home, should you list competitively, or should you speculate a bit and see if you will catch the “big fish”? Let’s take a look at both options.
What would happen if the real estate market suddenly shifted in favor of sellers, and you priced your home off comparable properties in your area that were now outdated (pricing it too low)? Well… in this case, you would likely have an offer on your home within a couple days and within 98-100% of your list price. You may even get competing offers and receive more than the original asking price. Your sale is now done and you can forget about it. You may have gotten $5,000–$10,000 more in 30–60 days, but that is only a possibility.
What if you decide to speculate a bit and you list for a modest $10,000-$15,000 over the determined market value (assuming an average price of $400,000 for the sake of scale)? Either the stars will align and the perfect person, who is looking for a house like yours, will completely ignore the rest of the homes on the market and decide to pay more for your property out of pure bliss and emotion. Or it will sit for a while. No one knows how long for sure, but you will likely consider a price reduction before 30-45 days. If the market is moving up, then your home may sell in a few months when the market catches it, but what if it doesn’t?
When considering a home to purchase, buyers don’t look at price alone. They always want to know how long a property has been on the market. If it has been sitting, they want to know why, and automatically assume that something is wrong. Furthermore, when they first view a home and decide it is not for them (could be price, layout, etc) even a price reduction rarely entices them to take a second look if they already feel that they don’t like the home.
The key to pricing a home is to look at your goals and assess how soon you would like it to sell. If you would like to sell quickly, then price your home 1-2% below market value to cushion yourself from fluctuations and to get on with your goals. At market value, you should expect to sell in the average selling time (depending on your market). But when you are overpriced, no one wins. It is like passing up a guaranteed cash pay out in a lottery to go for the big prize. You just might get it, but what if you don’t?
Is Your Home Priced To Sell
How do you attract buyers and get the most money possible as quickly as possible? Without digging too deep into it, let’s just said it usually starts with the price.
When a buyer is looking for a home, they generally start with a price range. That’s how they determine which properties they want to look at.
The price of your home is set by the seller as advised by a real estate professional but in all honesty, the value is determined by the buyer. It can be a hard pill to swallow, especially in the current market in Calgary. It’s important to keep emotion out of it because it can cloud your judgement and you may just overprice your home. Which can mean that your goals of attracting buyers, getting the most money and selling quickly may not be realized.
Factors That Affect Home Price
Things to think about when determining an asking price are:
- Timing: Is there any urgency to selling your property?
- Selection: What type of competition is there in your community? Are there are lot of listing or only a few?
- Market Analysis: A study of what homes in your area sold for in the last three to six months will give you a realistic picture of what similar properties went for.
Factors That Don’t Affect Price
Your real estate professional will be above to provide some objectivity because these things don’t count:
- How much you paid for your home. Your original cost is irrelevant.
- Improvements you have done. Yes, a new kitchen and bathroom will certainly add value but it’s no always guaranteed.
- The replacement cost of your home, which you may have kept in the back of your mind for insurance purposes. It doesn’t matter what the price tag is if you built your home from the ground up today.
- Your attachment to your home. Buyers make an offer based on how they feel, not on how you feel about the value of your home.
- Your out-of-pocket expenses in the sale transaction. As much as you’d like to add in property tax reconciliation, lawyer’s fees and commission, these items can’t be built into your price. They can be take out of the proceeds, however.
- What your neighbour has to say. They may have anecdotal information about what other homes in the neighbourhood are worth but take their advice about what fair market value might be with a grain of salt.
And If Your House is Overpriced?
Let’s say you want to start high with the expectation that your asking price can be adjusted if there’s no action in the first few weeks. In the meantime…
- Other homes in your neighbourhood will look pretty good compared to yours and will likely sell first.
- While you’re waiting to see if there’s any action, you are losing customers. Statistics show that 80% of likely buyers will come through your home within the first month of being on the market. If you don’t grab their attention, it might take another 60 days after that to find other potential buyers. It is already taking longer to sell in Calgary right now, so overpricing your home will just add to the misery.
- If your home is on the market too long because it’s been overpriced, people will wonder what’s wrong with it.
- You will continue to make those mortgage payments and if the home is empty, utilities and maintenance will have to be paid. Weigh these extra costs against the price you want over and above what’s been recommended to you.
- By the time you do get an offer, you may end up accepting a lower price than you would have had to accept should you have priced it correctly in the very beginning.
If you have questions about the true, honest asking price of your property, it only pays to work with a professional REALTOR®. You’ll save money in the long run.
Work With an Experienced Real Estate Agent To Sell Your Home
If you have been thinking about selling your home and would like to find out more about its current property value, an agent can let you know how much similar properties in your area have recently been sold for. This is a key starting point that will lead to the recommended selling price for your property.