How to determine the selling price of your home

It can’t be said often enough: setting a good asking price is the key to success when selling real estate. The price must be justified and competitive to get the most from your property sale. And it’s really not that complicated to sort out.

Here are the steps to follow and a few principles to make things clearer.

Summary:

• 1. Assessing fair market value
• 2. Setting the negotiation margin
• 3. Be objective and flexible
• Should you rely on the property assessment?

1. Assessing fair market value

The first step is to estimate the market value of your property. To do this, you need to conduct an analysis of similar properties recently sold in your area.

This begins by drawing up a portrait of your property, listing its characteristics (year of construction, number of floors, living area, lot size, etc.). Next, we check how much similar homes in the neighborhood have sold for. This gives an idea of how much buyers are willing to pay for a certain type of property in a given area.

In calculating the market value, all the features of the home are taken into account, such as the interior and exterior, the land, the neighborhood, the region and, of course, the state of the market. Please note, however, that market value is not the same as reconstruction value, which is used to establish an insurance amount in the event of a claim.

In addition to these factors, the general condition of the property must also be taken into account. Does it need major work? Are there any known problems with the property? Has it been well maintained over the years? All these questions will influence the selling price.

A turnkey home is more likely to sell for the asking price. Anything left out can lead to tougher negotiations or longer sales times. In short, knowing your property inside out is an essential step towards a successful real estate transaction.

Principle 1: Estimating market value is a crucial step. Make sure you are guided by an appraiser. It is an impartial, certified professional who has no bias in the transaction!

The market value estimation tool in EspaceProprio's mobile application lets you estimate the value of a property directly from your phone, by analyzing various factors and trends in the real estate market¹. Estimating the value of your property has never been easier. Just a few clicks and you'll get the result. You can do it for condos, bungalows, two-storey homes, semi-detached homes, cottages and townhouses.

2. Setting the negotiation margin

Once you've compared your property with the competition, you need to set a negotiating margin and determine the asking price. Keep in mind that a price close to market value will make it easier for you to attract buyers, who, let's not forget, want maximum value for their money. For an equivalent product, they will naturally choose the least expensive option.

Principle 2: While it's normal to keep a negotiating margin, it's best to keep it small and the price realistic.

3. Be objective and flexible

Finally, make sure you're emotionally detached enough when you talk to the buyer. Then, base your arguments on facts. In this respect, the documents given to you by the appraisers are excellent reference points to help you during the negotiation.

Don't forget to ask yourself this question: is it more important to sell quickly or to get the best possible price? This will help you determine whether you want to enter the market aggressively or more moderately. Then remember that the value of a property is strongly influenced by the ups and downs of the market. So you may have to adjust your price during the selling process.

Principle 3: The goal is to reach an agreement with the buyer. So be firm, but not intransigent, and stick to the price scales you've set.

Should you rely on the property assessment?

Municipal assessments, also known as property appraisals, are carried out by the municipality's chartered appraisers or by a private firm. The data contained in the latest municipal assessment is much less accurate than that of a certified market value assessment. Firstly, because the municipal assessment is generally carried out en bloc, i.e. it is based on a set of properties in the neighborhood to establish a value. It is therefore not representative of the price at which you could sell your property.

Municipal assessment values should never be used to establish a purchase or sale price. In fact, it is only used to determine the annual amount of municipal and school taxes that the future owner will have to pay.

Often, no one will come and inspect the interior of your property to assess its value. So your latest renovations won't be counted, even if your new kitchen with its magnificent granite countertop adds to the value of your home. The municipal assessment is therefore not a good indicator for establishing the selling price of your home or condominium.

"Relying solely on the municipal valuation could be misleading. Firstly, the market may have undergone significant fluctuations since the reference date. Secondly, work may have been carried out since the last visit by a municipal inspector. These are the kinds of situations that can create a discrepancy between the municipal value and the market value of a property," explains Marlène Bates, professional appraiser at DuProprio.

DuProprio offers a variety of tools and the advice of a team of appraisers to help you establish the value of your property and justify your price to buyers during negotiations. To find out more about our services, watch our short video or schedule a call with one of our advisors.