The bigger the box they try to put you in, the less you should rely on it.
If you’re using mainstream media reports to gauge the local market conditions, you might be horribly off-base. Local details are much more significant than national patterns. Local real estate professionals are excellent resources regarding real estate prices on specific streets, in particular condominium complexes or in certain subdivisions.
In fact, my reply when somebody says, “How’s the market?” is usually, “Experience shows that whenever people ask that question, they want to know about THEIR market.”
And it’s true. If you live in a 2500 sq.ft. 4-bed double garage home in Milton… that’s your world.
You don’t really care about what happens in the Fort McMurray, Alberta townhouse market, do you?
Paying attention to local changes, improvements and patterns is crucial when determining real estate value for many reasons:
If three similar properties were for sale on one street, an individual property owner may receive a lower offer from a buyer who is comparison shopping. In an area where houses rarely come up for sale, a single listing may be snapped up at a price that reflects the rarity of this event. Or, the opposite could happen. As I like to say… “you are only as good as the last few sales in the area”.
A new neighbourhood development may drive area prices up or down depending on how well this project is integrated into the neighbourhood. Employment creation or job loss in the area may drive prices, respectively, up or down. Population shifts and net migration in or out also have a significant effect. Different seasons and times of year can have a significant effect on values… for example, which season is the busiest for cottage country properties? Spring, of course!
Condominiums, houses and other properties that require little additional cash outlay may exhibit more price stability that real estate where major renovation, modernization or accessibility up-grading is essential to property enjoyment. Think about how more variation there is in prices between an Oakville lakeshore property compared to a Milton townhome. The Oakville property price variation, depending on the finishes, could fluctuate by hundreds of thousands of dollars, whereas the difference between a basic townhome and a fully “pimped out” one is probably $30,000. There’s much more variation (and it’s much more challenging) to price the lakefromt home.
Even more important, there are also elements within each individual transaction that reflect in the final sale price. Learn the context for a sale price before using it as a benchmark for pricing your real estate. A property owner may accept a lower sale price and still consider they’ve received full compensation when there’s perceived value in OTHER aspects of the sale, or the seller may demand a higher price when asked to make concessions to a buyer’s needs:
If the seller has already bought and wants to match the closing date on the new property, this may allow a buyer to negotiate on selling price. To avoid moving twice (or being homeless), this date could have tremendous value for a seller.
Conditions and Financing
When the buyer asks for few, if any, “subject to” concessions from the seller, including conditions on financing and home inspection, there may be more room for price negotiation. In competition, I’ve seen sellers accept lower prices when the offers have no conditions (called a “cash deal”), because of the guarantee that the transaction is firm and final, without any loopholes for the buyer to escape (for example, small issues in the home inspection can really mess up a transaction).
If the seller is not asked to include appliances, lighting fixtures, furnishings and other items in the transaction, a seller who will therefore not have to replace these items in their next property may be more flexible in negotiations. Aunt Edna’s wedding gift washer and dryer can sometimes have a significant effect on the transaction. Countless negotiations have been won and lost on a garage door opener, believe me. 🙂
The benefit of tracking Canadian and North American real estate news is to gauge the feelings and confidence of buyers and sellers (because the less informed people not reading this post don’t know any better LOL)… but search for local relevance.
The insight and knowledge shared by an experienced local real estate professional may prove invaluable the next time you’re looking to price your home, or even when you are wondering what shifts are occuring in pricing climate.
Just as an average increase in area or regional prices does not add equal value to every property in the area concerned, an average decrease in prices does not forecast doom for every property owner. Facts matter when markets shift.
Solid, reliable, intelligently-presented local real estate information is essential to owners and buyers intent on keeping a “pricing” finger on the real estate pulse — locally, that is.