Listing price is a form of marketing
Alot of homes sell for more than the listing price. Isn’t the listing price supposed to represent what a home is worth?
I often hear from would-be buyers who aren’t sure about what the listing price represents.
In a competitive seller’s market — like we have in many areas of the province — you’ll often see headlines about properties that sold for far more than their listing price, also known as the asking price.
It’s important to remember that only highly unusual sales are newsworthy. While it’s particularly common for homes in the GTA market to sell for more than the listing price, they’re not all getting the level of interest that makes headlines.
So, then, what does the listing price really mean?
At its core, it’s a form of marketing. Sellers can set the listing price to any value and sometimes they will choose to set an asking price below what the property is likely to sell for to try to generate more attention and interest.
But it’s ultimately their decision. Sometimes it works and generates lots of interest and higher offers, and sometimes it doesn’t.
If you’re interested in buying a property and you want to know how much you should offer for it, the listing price isn’t necessarily the best figure to look at. Instead, consider asking your broker or salesperson for two things: sales prices for similar properties in the area and their expert opinion about the home’s likely selling price. This strategy can be just as useful for buying a condo as it is for a house.
When it comes to comparing similar properties, no two homes are exactly alike. When you’re comparing the property you’re interested in to other properties, carefully consider the differences that would affect how much it’s worth. For example, a bigger lot or more square footage would increase the home’s value. But if the finishes aren’t as nice or it has fewer bathrooms, that could bring down the price. This is an area where a real-estate professional can provide expert guidance. With their knowledge of local market conditions, they can compare the properties and take into account many other factors to provide expert guidance on how much you should offer.
However, it’s important to point out that sellers don’t have to choose the highest-priced offer. They might choose a lower-priced offer based on the size of the deposit, the closing date or other conditions attached to the offer. In the end, they are not obligated to actually sell the home if they don’t get an offer that meets their needs.
There’s no denying that the offer process can be challenging for buyers. That’s why a little research can go a long way. With your broker or salesperson’s help, you can find an approximate value for a property, instead of focusing on the listing price. Joseph Richer is registrar of the Real Estate Council of Ontario (RECO). He oversees and enforces all rules governing real estate professionals in Ontario. Email questions to askjoe@reco.on.ca. Find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at youtube.com/RECOhelps.