4 - Understanding the Market Value of Your Home

4 - Understanding the Market Value of Your Home

To set the price for your home when you list it for sale, you need to have an accurate idea of what your home is worth. Sometimes sellers mistakenly assume this figure is roughly  the price they paid for it themselves, plus the value of any upgrades they have put into it.

In reality, the ‘worth’ of your home is another way of saying ‘what someone would reasonably pay for it’, and there are many factors that affect this estimate, including:

  • Mortgage rates
  • Seasonal markets
  • Supply and demand
  • Location and recent changes to the area
  • Condition of Property

Understanding Terms for Market Conditions

There are three common terms used to describe the current climate in the real estate market:

  • Buyer’s Market: When and where the supply of homes listed exceeds the current demand. Prices could be stable or dropping
  • Seller’s Market: When and where the demand from prospective buyers exceeds the supply of new listings. Properties sell quickly and prices are often increasing.
  • Balanced Market: When and where the number of homes listed for sale is approximately equivalent to the number of prospective buyers. Prices are stable.

The real estate market is always changing, not only day by day, but also area by area. Your realtor has the best information and understanding of these market trends and changes, and can assist you in estimating your home’s market value so you can choose the right time to list, and set an effective price. 

Your realtor will help you set an ‘asking price’ for your home. This price should attract the most number of potential buyers at a reasonable price for the market value - It should not exceed the market value by more than 5%. Pricing too high will lower the number of buyers who are interested, and pricing too low can also put off interested parties who may be skeptical, or looking for the ‘catch’. 
 

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