Federal Gov’t: Slow Down The Real Estate Market?
Finance Minister Bill Morneau recently announced that the federal government is looking at measures to slow housing markets, with particular attention to the GTA and Vancouver. Considering that 2 of the biggest factors in this sellers’ market are immigration and interest rates, are they planning to stop further immigration, or simply increase interest rates to a point that takes large numbers of buyers out of the market? Of course, this will make homes even less affordable, which is the problem they’re trying to solve in the first place.
This is symptom of the illusion that anyone can control any aspect of the real estate market, which they can not, with the possible exception of the banks. The guiltiest of all those who think that they can control the real estate market? …Realtors! That’s right – I said it.
Ever since the markets in various parts of the GTA have gotten strong enough to even occasionally draw multiple offers, there have been realtors who think we can control the market by simply under pricing by one or even two hundred thousand dollars, claiming that this will push the price higher.
Now, don’t get me wrong. There’s a distinction between pricing sharply or slightly below value, to attract buyers that are just slightly under that price range, and grossly under pricing to attempt to create a frenzy. Take a moment to capture the imagery. Would you prefer industrial bees, carefully working pollination of a flower, or a frenzy of flies open to anything that grabs their attention?
Each home is unique in certain ways, and needs a game plan that is best for that home and for the home owner. If the targeted sale or list price is slightly above an obvious point break, then pricing slightly under that point should increase the buyer pool that can likely afford that home, but have been trying not to enter that price range. Prudent buyers get approved for a certain purchase amount, but choose to keep their budget lower as a preference. However, if they see the right house and realize that they may have to go higher to compete, they often will.
A home, or any product for that matter, that is priced significantly below value, will attract buyers that don’t realize that they can’t afford it. There are also many buyers that are only willing to go so high over the asking price, regardless of the intended value or their budget. And if the resulting offers are not up to the seller’s expectations, they will often refuse to accept any of the offers on the table, and then raise the price the next day to what it should have been listed for in the first place, but now without the impact of a new exciting listing. Buyers considering an offer are likely to be put off, having had their time wasted, and other buyers will be wondering what’s wrong with the property, and why it didn’t sell the first time. In short, they will have missed the best opportunity to sell for the highest price, and potentially cost themselves tens of thousands of dollars and in some cases, a lot more.
If the home is priced closer to where it is expected to sell, the target audience will include a higher percentage of buyers that can realistically afford it, and have a better understanding of that home’s value because it compares more closely to the other homes they’ve been seeing and are comparing it to. In the end, they may receive fewer offers, but most, if not all of them, will be from qualified buyers who are more likely to afford that home, and most if not all the offers are more likely to be higher than the listed price. Now, they have maximized the potential for achieving the highest sale price.
So, what’s the best way to ensure you have the best strategy for selling your home in any market? Choose the right realtor, who is genuinely interested in what’s most important to you and your family, and is committed to strategies that will achieve the highest possible sale price.
If you are planning on selling your home anytime in the next year, or if you have some interest in knowing the potential market value of your home, please call me. I would welcome your call and I’m never too busy to help you and your family.