When Listing Real Estate Make Sure That You Do Your Homework.
Knowing what price to list real estate can become quite difficult. There is a matter of knowing what the land could potentially sell for, as well as what the seller believes the land is worth. Many times, the value of the property and the potential sale price of the property don’t align. Most of the time, a seller values their property higher than what a property can potentially sell for; therefore, as an agent, it is important to gather relevant market information to help the seller make informed market decisions.
I recently sold a 5-acre parcel in the RM of Corman Park that was zoned country residential. Quiet location, beautiful landscape, only 15 minutes away from the city’s westside. The RM of Corman Park had the tax assessment at $140,000 for the 5-acre parcel, a recent appraisal had the land value at around $105,000, the owner valued the parcel at $120,000. We listed the parcel at $109,000 and sold it at $98,000. While you scroll social media, you will see that many agents post how they are selling properties at or above list price; however, that is all relevant to the strategy for which you list a property.
Some can argue that if your property sold above the list price, you didn’t price your property according to the market. To me, I believe that you compare the sale outcome to the available comparables to the market, not what a property has listed for. With the aforementioned property, it sold for $11,000 or 10% under listing price; however, most importantly, it sold $8,000 or nearly 9% higher than the nearest comparable within the area.
The seller thought he could sell the land for $105,000; I thought the land would sell for closer to $90,000 in around 300+ days as the demand in the area was sparse. When the buyer presented the offer, the seller was aware of the sparse demand in the area and countered the initial offer at a price where they felt they could secure a sale. The buyer agreed and within 38 days on the market, the parcel was sold.
By being able to present my seller with relevant market information before listing, they were aware of the market demand, as well as the potential sale prices that their land could sell for. Although the land sold below their value of $105,000, the seller was happy to sell at $8,000 higher than a similar piece of land in recent months. Sometimes an agent may list a property lower than it is worth as they want to generate interest in a property for a short period, other times an agent may list a property slightly higher than the potential sales prices to allow for negotiations. In my opinion, it's irrelevant what the property sold in comparison to the list price. What is relevant is that the property is sold at a fair market value that meets the needs and wants of the seller.