I recently presented to a potential client who needed to sell their home in a very desirable Toronto neighbourhood. This seller had been living in their home for over 25 years and had made no real significant improvements to their property. Upon my initial inspection of the home I saw all the objections any buyer would have to the property including having to renovate the kitchen and the bathrooms, removing old floors, replacing some windows, installing a new roof and the list goes on. Plus, the floor plan was not your typical layout for the area and the backyard was short – so neither the floor plan nor the yard was ideal for a family with young children which is the usual buyer for this neighbourhood. Don’t get me wrong, the house was in good shape and it was very clean but as a Realtor® we have to price the house accordingly to mitigate these buyer objections.
This seller thought they knew better. They had heard on the news how the real estate market was hot and how everything was going into bidding wars selling for thousands more than the ask price. They said to me, “I want a million dollars or more for my house!” However, comparable properties did not support this price level. This particular seller ignored the facts. They went to market with another agent at a million dollars – a price over market value by about 10%. To make matters worse, they held back offers with an offer date expecting a bidding war. A real risky strategy. No surprise, over a month later the house is still on the market with no price adjustment, just sitting there getting stale.
The right, qualified buyer for that home would have seen it the first week it went to market and has since then moved onto another property knowing full well their dollars will take them further elsewhere. In a hot spring market where properties are moving quickly, the overpriced home that sits makes new buyers that see it very suspicious. They wonder what is really wrong with it. In contrast, buyers get excited about those desirable houses that are new to the market and they forgo making offers on the stale ones. They do their research and they see a lot and I mean a lot of properties and they know what properties are actually selling for because their Realtor® shows them the comparable sales. Many have already been in a few multiple offers and have lost out before they secure their home so they have an understanding of the current market conditions and they know what they are willing to pay.
Every Realtor® has had a few sad stories like this one and all we can do is educate our clients and manage their expectations. This particular seller, who was not ‘testing’ the market and actually had to sell, will sadly have to sell at a loss below market value in order to get the deal done. The lesson for all sellers, the numbers don’t lie – let the comps guide you.