Just because the market is hot, it doesn’t mean you can ask whatever you want

The real estate market in Edmonton is hot right now, we all know that. What many people don't know, is the best way to buy or sell real estate when the market is hot. Now, I know many of our readers would say that a hot market is not a good time to buy real estate, and to a certain extent that's true. If you're looking to buy in a neighbourhood or price range that is competitive, and you want to be successful, you may have to pay a premium, be prepared to act quickly, and miss out on a few before you find success.

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From a seller's perspective, a hot market is an ideal time to sell, but you still have to be realistic. This is what is happening in Edmonton right now: attractive, well-priced, well-marketed properties in some areas and price ranges are selling quickly, often with multiple offers, often over list price. Meanwhile, over priced properties are just sitting there, making the realistically priced properties seem that much more attractive.

It's natural to be optimistic about selling your home when homes are selling quickly, and prices are on the rise. If you over price your home, and the average sale price is going up, eventually the market will meet your price, right? Maybe not. 

Regardless of the market conditions, the best chance to sell most homes is when they first come on the market. This is because all the buyers that are already looking for a home like yours will view it when it first comes on the market. If they don't like it, you have to wait for new buyers to enter the market to get more interest. 

Now, you can always reduce your price, right? Maybe not. Humans are funny beings, and psychology has a lot to do with how we buy homes (as we recently discussed in our post on staging). When potential buyers see a home has been sitting on the market for awhile, regardless of the reason, they discount it; there must be something wrong with that property, or someone would've already bought it. If they do get over that initial hesitation, and view your home, and decide to make an offer on it, they tend to negotiate harder.

For example, I took a look at single family homes sold between $400k-$500k sold in the past 30 days, and here is what I found:

  • Homes that sold in 7 days or less sold on average for $1,644 over list price.
  • Homes that sold in 15 days or less sold on average for 99.7% of list price, or $1263 under list price.
  • Homes that sold in 30 days or less sold on average for $3834 under list price.
  • Homes that took more than 30 days to sell, sold for $9676 under list price.
  • Homes that took more than 60 days to sell, sold for $17,143 less than their original list price.

So, is it worth it to try for more, while you spend more time getting ready and getting out for showings, only to take less in the end? If you're thinking of listing your home, we'd be happy to help you price it right, contact us anytime.

About 

Sara MacLennan is the Director of Marketing at Liv Real Estate and a licensed Real Estate Associate. The bulk of Sara’s experience and wealth of expertise lies in on-line technology and marketing both for agents and consumers. Sara is the former National Director for Interactive Marketing for Coldwell Banker Canada where she was responsible for an extensive training program traveling to offices across the country training agents and brokers on marketing and technology. Find Sara on Twitter @edmontonblogger.

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7 Responses to “Just because the market is hot, it doesn’t mean you can ask whatever you want”

  1. wsnNo Gravatar 10. Apr, 2014 at 3:49 pm #

    The stats that you listed don’t necessarily prove your point.

    Maybe, just maybe, the “homes that took more than 60 days to sell, sold for $17,143 less than their original list price” were listed $30,000 more than their competitors. So even after a hefty price reduction, they still made more money.

    • Sara MacLennanNo Gravatar 10. Apr, 2014 at 8:17 pm #

      We are dealing with averages here, so there are certainly going to be examples that fly in the face of every argument. Maybe there are properties that were listed for more than 60 days that sold for $100k less than they were asking, I know of many examples where that is the case. The point is that on average you’ll do better in the current market if you price your home reasonably.

  2. GMNo Gravatar 10. Apr, 2014 at 11:42 pm #

    If a house doesn’t sell within the first 2 weeks in a hot market the owner is strongly encouraged by the realtor to reduce the price.

  3. FeatNo Gravatar 10. Apr, 2014 at 11:47 pm #

    Calgary market started to cool down.

  4. JohnNo Gravatar 11. Apr, 2014 at 1:30 pm #

    I really enjoy your articles, but think this advice is one of the worse people can give to prospective sellers. From my expereince if the house sells within 7 days, I think the realtor did a terrible job.

    I have purchased 4 properties where the properties were $40,0000-$90,000+ below market. The best deals are estate sales. If were to sell my property, I would rather be little over than way under. I think a fair time frame that your property should sell is withiin 45 days.
    I have never lost a mutilpe offer situation because I always pay above market especially if I know the house is underpriced by over $100,000. People are so cheap here, I think a lot of people don’t know the real value when it comes to investing. You can tell them the value is below market, but they would want it for even $30,000 lower.

    A real good example is the character home in Westmount listed for $325,000 right now, 3 years ago you couldn’t even find a character home for that price. I have the value at over $400,000+, so I would offer even $365,000, maybe that’s why I can make money in any market. The owner was super smart, found a way to keep it. In order to be good in investing real estate you need to think 7 moves ahead like in chess, like acquiring, renting, exit strategy.

    I think the biggest thing people need to know is the evaluations of most of the zones in relation to the overall market. If youi don’t know that, then can you make a calculated guess which area is undervalued.

    • wsnNo Gravatar 11. Apr, 2014 at 2:28 pm #

      I agree with you, John.

      If a listing gets multiple offers over the listing price, the listing agent didn’t do a good job and the seller suffers.

      The right price probably would result in just one offer in the first month and the property gets sold right there.

    • EdNo Gravatar 11. Apr, 2014 at 8:39 pm #

      John,

      I’m guessing you have an overpriced house for sale in Westmount right now, and things aren’t going well…