Real Estate Talk: Pricing
to sell in today’s market
How does a property sell in a soft market with few buyers and sellers?
By Joseph Marovitch
November 3, 2022
The market has performed a 180-degree turn compared to six months ago. During the pandemic, we had bidding wars instead of negotiations, which was not the norm. Today, with high inflation and rising interest rates, demand is much lower. Low demand and average to low supply cause prices to drop. Therefore, the question is, how does a property sell in a soft market with few buyers and sellers?
Supply and demand dictate prices, and we read the market by examining supply and sales over a given period of time.
There is a new reality that sellers must face. The values gained during the pandemic and even before the pandemic are not the value property has now. The city has significantly raised property values based on pandemic prices, however, the municipal values do not reflect the current situation.
In time, possibly after a forced recession, prices will rise but, for now, if homeowners must sell, their property must be compared with sold property in the last six months to know the value. Comparable sold property tells a story and indicates few if any, multiple offer scenarios and homes remaining on the market much longer with several price decreases each month.
Supply and demand dictate prices, and we read the market by examining supply and sales over a given period of time. Pricing property consists of the following:
- Examine all the comparable sold properties in a six-month to a one-year period for sold prices. This tells the story of how much properties comparable to your property sold for. This is the reality factor.
- Examine all the comparable properties to the seller’s property that is for sale. This indicates what the seller’s property is competing with. If the seller has the same municipal evaluation but more or less land, more or fewer bedrooms or bathrooms, and more or fewer upgrades, this affects the seller’s price. Buyers want the most and best house for their money.
- After examining all the factors and more, the property is placed on a scale from lowest to highest possible asking price and selling price.
- The final factors affecting where the property will be placed on the scale are the condition of the property and how fast the seller wants to sell.If the property is in excellent and upgraded condition, it can be placed on the higher end of the scale. If the property is in poor condition and requires renovation, it should be placed on the lower end of the scale.
If the seller wishes to sell quicker, then the property can be placed at the lower end of the scale. If there is no rush, placing the property on the higher end of the scale can be acceptable.
‘It is always good to use a strategy and place the property on the scale in an advantageous way.’
However, other factors come into play when the property is placed on the higher end of the scale. It is always good to use a strategy and place the property on the scale in an advantageous way. Pricing a property slightly lower than its value can generate more interest and better offers.
Should you have questions or comments, please refer to the comments section at the bottom of the page. As well, to view past articles, click here.
Next article: Pros and Cons of Selling During the Holidays
State of the market
Property prices are falling due to high-interest rates, inflation, slow supply chains and global economic turbulence. Yet, the government has raised municipal taxes between 30% and 50% or more in Quebec based on pandemic sales prices that were off the charts. The municipal tax increases do not reflect the market at this time. Many properties, if they must be sold now, are selling at pre-pandemic discount prices.
‘It would be better for sellers to hang on and wait for inflation and interest rates to drop over the next two years before selling.’
Then there are income property sellers who must face the reality that costs are higher and demand is lower. Many income property sellers are not facing this reality and are attempting to sell multi-residential income properties at cap rates of 2% or 3%.
It would be better for sellers to hang on and wait for inflation and interest rates to drop over the next two years before selling. Only sell if you must and, if you are selling, price the property properly. Then the seller will not waste time and money as the property sits on the market for too long.
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Joseph Marovitch has worked in the service industry for over 30 years. His first career was working with families from Westmount and surrounding areas, hosting children between the ages of 6 to 16 as the owner and director of Camp Maromac, a sports and arts sleep away summer camp established in 1968. Using the same strengths caring for the families, such as reliability, integrity, honesty and a deep sense of protecting the interests of those he is responsible for, Joseph applies this to his present real estate broker career. Should you have questions please feel free to contact Joseph Marovitch at 514 825-8771, or firstname.lastname@example.org