Real Estate Talk: Pricing
to sell in today’s market
We are still in a difficult market with rising interest rates and inflation
By Joseph Marovitch
Updated November 1, 2023
It appears that between November 2022 and today, little has changed. We are still in a difficult market with rising interest rates and inflation, and world events have made the future even less certain. There are factors that determine the rates, inflation, supply chain and even our own security.
There is a violent war against extremists in the Middle East. There is another violent war against a despot Russian aggressor in Ukraine. There is extreme government division and turmoil in one of the most powerful and influential countries in the world, the United States, and another possible dictator/bully attempting to be president, which could overturn and destroy all the current U.S. institutions.
Another factor at play is the U.S. has two aircraft carriers in the Middle East engaging in skirmishes with Iran and Syria in an attempt to keep the war from escalating. This alone can cause a world war, bringing in China, Russia and Iran.
Also, right here at home, the Quebec government is attempting to undermine and ruin our medical and educational institutions in an effort to rid Quebec of the English population, which can eventually lead to a recession in Quebec as money leaves an unstable province. All these issues make it very difficult to determine the course of the economy and real estate market.
The Bank of Canada has aggressively raised interest rates nine times in the past year to bring down the inflation rate. This effort has had a significant effect on the real estate market by reducing property values. Raising interest rates and lowering property values have caused a reduction in both buyers and sellers.
Most buyers are waiting for interest rates and inflation to drop, so their carrying costs (expenses to maintain a property) will be less. Some buyers believe property values will decrease further with future rate hikes in 2024 and will therefore get to pay even less for a property.
The bank of Canada has aggressively raised interest rates nine times in the past year to bring down the inflation rate. This effort has had a significant effect on the real estate market by reducing property values.
Most sellers are waiting for interest rates to drop so their property’s value will rise.
Then there are those buyers and sellers who must act now due to having to relocate, requiring more room or less, financial circumstances, and a myriad of other reasons. Therefore, if one must sell now, property pricing is of paramount importance.
Supply and demand dictate prices, and we read the market by examining active listings and comparable sales over the past six to twelve months. Pricing property consists of the following:
- Examine all the comparable sold property 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 property 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, and we want as many buyers as possible to get the best price and terms.
Follow one simple rule when selling – do not place the property above or below the market price, as this will lead to either assisting other homes to sell if the price is too high or losing money if the price is too low.
Follow two simple rules when buying – do not pay more than the market value and make sure the property can be easily sold. Therefore, consider location and condition.
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: How effective are open houses and ads?
State of the market
Bank of Canada Interest Rate 5%
CPI today (inflation rate) 3.8%
As previously stated, the real estate market is uncertain. Rates have risen and will likely rise further in the new year. With the new war in the Middle East, it is uncertain where oil prices will go, whether the supply chain will slow down and, if so, how high inflation will rise as will interest rates. The key now is to be as pragmatic as possible and do what is in the best interest of the buyer or seller based on immediate needs. Leave investment goals alone for now and do what must be done to maintain financial security.
‘The key now is to be as pragmatic as possible and do what is in the best interest of the buyer or seller based on immediate needs.’
Sell if required, but negotiate the best price and terms since the funds will be required to find one’s next home. If purchasing, also negotiate hard and do not overextend your finances, as this could be disastrous in today’s political and economic climate. If you can afford not to sell, hold on as long as possible since real estate and gold are the best things to own in today’s world.
Have a great week.
Disclaimer: The opinions expressed in this article are those of the author and do not necessarily reflect the opinions of WestmountMag.ca or its publishers.
Let’s not forget that people with cancer are vulnerable too!
You are invited to keep giving to the following organizations since it’s now more important than ever to support cancer research! Click on the logos below to find out how:
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