By Aleksandra Oleksak, The Real Estate Chick
Toronto has been experiencing a heated sellers’ market this year in the housing sector.
We’ve seen a lot of homes listed below market value with offer deadlines to generate multiple bids. Although it’s a strategy that most realtors are using right now, it can give false hopes to some potential buyers. Buyers get excited when they see a new listing come up with a low purchase price that’s at the top end of their budget, and sometimes don’t realize these homes are under-priced and will sell anywhere from $50,000-$250,000 over the asking price.
In order for buyers to save their time and emotions before going into a bidding war they are sure to loose, here are some factors to consider when determining true market value.
Have your realtor pull the recent sold homes in the neighbourhood and do an apples to apples comparison. Make sure the comparables are the same type of property (detached, semi-, or row townhome) with similar lot size, number of bedrooms, and bathrooms, parking, and state of basement, as the subject property to understand the true value. If there isn’t a direct comparable, an experienced realtor should be able to “plus or minus” certain features that exist or don’t exist in the subject property to come up with a numerical value.
Does the subject home have certain “wow” features that hold value, whether subjective or not to certain buyers? Those things could be a recently renovated kitchen or bathroom, a finished basement with an apartment for potential income, a hot tub, a workshop in the backyard, among many others. While some of these things may not be on your wish list, they could be on others, meaning buyers are willing to pay more for them.
The neighbourhood is key as we all know real estate is about location, location, location. But go further and check if the neighbourhood has recently been named one of the best neighbourhoods in Toronto, or has been recently featured in the news. This will cause a spotlight on the neighbourhood and bring in extra potential buyers that weren’t initially considering this neighbourhood. Don’t forget about the school zones either, you may not be at that stage in your life, but others are and if the subject property is in either the best or one of the top school zones in Toronto, that could be a subjective value that buyers are willing to pay almost anything for.
Have a look at which realtor has listed the subject property. Maybe yourself or your realtor know the listing agent and realize they have a tendency to list all their client’s homes $50,000-$100,000 below market value. You can also have your realtor ask the listing agent if there is a particular sold comparable the seller’s are comparing their home too. Therefore based on all these factors, you can slowly get a sense for what this home will sell for and if it’s in your budget to begin with.
Although it seems like this is a tough market for buyers to navigate, hiring an experienced professional and being truly aware of what’s happening in the market will make the experience more enjoyable and successful. As a buyer, if you’re losing bidding war after bidding war, something is not right and you should start over with these tips to help you establish true market value on the next property you are bidding for. Good luck!
Aleksandra Oleksak is Her City Lifestyle’s “Real Estate Chick,” and a Toronto real estate professional with Sage Real Estate. As @RealtyQueenTO, her real estate blog has been named one of the top 50 real estate blogs in Canada.