While I can’t give you details on any one deal – it’s confidential stuff - I do see clear patterns across many deals ... patterns that may interest you. My buyers are often surprised when I tell them we can predict within range, what a property will likely go for and that it has nothing to do with ask price. Here's what you need to know about market patterns and how to effectively predict them - useful stuff for sellers and buyers both.
Even in Toronto's unquestionable seller's market, at least one age old truth still applies. It is the buyer who sets the selling price. Any property sells for what its worth in the eyes of its buyer. So it follows that recognizing market patterns and predicting value is a game of getting into the minds of the current buyers and understanding what is important to them.
Turns out, sellers who don't have a competent realtor giving them perspective, have a huge blindspot, today more than ever: many sellers THINK they can set their price. Their thinking goes: "this is what will make it worth my while to cash out", or "this is what my house is worth since it's what so-and-so got got when they sold", or "we're marketing experts so our marketing skills will no doubt set a new benchmark price" (aka we're better and smarter than everyone else).
But market value has nothing to do with what the seller wants. It has to do with how much a buyer is willing to pay. And it's your realtor's job to figure out just that. Admittedly this part of real estate is an art and is more challenging now than ever before to get right. The market has never been more fluid, faster paced, with higher stakes, (complicated with bigger seller egos). But whether or not a listing finds a buyer, two or twelve, those buyers are attracted to it for a simple reason. They deem it better than another.
Buyers figure out what a property is worth to them through COMPARISON. The process of determining market value is then, a game of evaluating 'the comps' even when there are no obvious ones. Buyers compare what else has already sold nearby, what else is out there that possibly appeals to them more, what something like this will likely go for in the future, and what the likelihood is of something better coming along next. Moreover, buyers are mostly casting an even wider net for their comparison than ever before. If you're selling in the burbs, they're comparing many different suburbs not just yours. If your house is in the west end, they may be comparing it with one in the east end too, just in case they find something better. Not to mention the condo versus house, or city versus country lifestyle comparison that is alive and well, today more than ever.
A couple of my savvy buyer clients who were interested in a property last week, for example, were hesitant to move forward on it without proper knowledge of relative value. As they should be. But in no time, by looking at comparable past sales, looking at what is on the market currently, and what they would have to put in to make that particular property work for them, they could define very confidently what the house was worth, to the market in general and more importantly to them. Through comparison they could rule it out decisively and choose to wait for the next opportunity.
Footnote: that particular property is still for sale and has been for well over a month - an eternity in the Toronto market at its first time buyer price point. Other buyers have done their own comparisons and have reached the same conclusion. The only one not in agreement is the seller. A seller who still thinks he sets the price, working with a Realtor who hasn't yet told him that he doesn't.
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