Everyone would like to know what their home is worth today. It is probably the biggest asset you have and it can make or break your net worth. It’s like watching the Canadian/Us dollar and figuring out what your purchasing power is or the stock market to see what your portfolio is worth. It’s one of those things that you don’t have much control over but it can effect your life in a big way.
So how do you figure that out? Well, you could put it on the market and say you won’t accept any offers for 60 days and then accept the highest bid at the end. The market would then decide. Of course most buyers would not wait that long and wouldn’t put in an offer. You can study the market yourself and try to figure it out but you will be prejudiced about your own property and probably get it wrong. Yes, I have heard the sayings such as “ This is not my first rodeo” and “I’ve bought and sold many houses before, I know how to do this”. You may have bought and/or sold 3 or 4 or even 10 homes in your lifetime. Of course the average Realtor has been involved in the buying and selling of hundreds of homes and more specifically, in this area. Call a Realtor. Get a market evaluation or two or three. Then put on your buyers hat and take a hard look at those prices. Would you buy it? ............Really? Would you run to your Realtors office and say “ I have to buy that house today”.
Every buyer is struggling to find a benchmark with which to judge the value of a home for sale. It is very confusing to them, especially if they are not familiar with the area. They can’t walk in and say “ That’s a good deal” based on their experiences from somewhere else at some other time. This is one of the reasons it takes most buyers so long to make a decision about buying here. They have to look at a lot of properties to figure out the benchmark for the type of property they want and then make a judgement call about any specific property.
In the city, where you will find an area with hundreds of homes that all have the same basic factors of location, age, size, style and amenities such as sewer and water. A Current Market Assessment ( CMA) is probably pretty accurate because many of those homes have sold in the last short period of time so the value has been established. Because of this the BC Assessment figures are pretty accurate in the city. It can be used as a benchmark as long as you take into account that they are about 1-2 years behind the current market because they only go on past sales and don’t take aesthetics into account. Just the size, age, bedrooms etc., just the facts please. On Salt Spring that is not the case. If you look at all the sales on Salt Spring for the last calendar year, the sales were about 103% of the BC assessment values. Not bad! Unfortunately within those sales they ranged from 42% to 217% so it doesn’t really work for each individual property. Back to square one.
Here’s an exercise. To set a benchmark, take all the sales in the past year and find out what the parameters of the average sold property was. For example, for a non-waterfront, non-oceanview single family detached property. Of the 73 sales in the last year the average home was: ( rounded numbers) A) built in 1980 B) 3 bedrooms C) 2 baths D) 1800 sq ft E) 2.65 acres. It sold for an average of $440,000. That’s the benchmark. Now for any individual property you have to add value for positive attributes and deduct value for negative ones. For example if the property you are looking at has 4 bedrooms instead of 3, add some value. If it only has one bathroom deduct some value. Once you have done your balance sheet exercise, you can have a reasonable judgement as to the pricing of that home. Of course the amounts you deduct or add are only in your opinion as it relates to your wants, needs and desires. That may be totally different to what the general market says. A seller is going to look at the whole market potential. If you and the seller can’t meet eye to eye, no sale. At lease you can feel comfortable knowing that the price was too high for you. Maybe it’s not for another buyer who gave different values to the positive and negatives. If you do the exercise and the home your looking at is less than the number you came up with you can feel reassured you are getting a good deal.....for you. As long as you take into account that some day you are going to want to sell and then it is not your opinion that counts but the general market.
You can do the same for properties with other parameters. Choose only waterfront or only ocean view homes and run the same exercise. Your Realtor will be able to help you do this. They will also be able to give you advice as to what the general public considers to be positive or negative attributes. This applies to both buyers and sellers.