Ben Sage - Woodstock Ontario ON Real Estate Sales Representative (Realtor)

Can We Give You Some Advice for Pricing Your Home?

When pricing a house, our Real Estate Team definitely does not simply plug numbers in a calculator and spit out a price. There are a few methods that we generally use to determine a fair asking price for your property.

1. Market comparables are used; recently sold houses, expired listings and current market competition.
2. We then weigh the overall quality of the home, the demographic currently buying and their unique needs, and overall market volume in order to assess value.
3. The third method that we use is a Market Value Inflation formula to statistically determine a proper value of your home. This particular formula is fairly specific to our local market within Oxford County and does take the
Toyota impact into consideration.

The Market Value Inflation formula:

Normal market conditions dictate a 2-3% increase in value per year assuming proper renewal has been performed (such as furnace and roof replacement) and good general maintenance. It does not consider major upgrades or renovations. Additionally, we can statistically prove that the announcement of the Toyota plant construction in Woodstock did trigger a 23% increase in property values locally through 2005 and 2006.

For example A house purchased in Woodstock in 2004 for $150,000 could presently be worth $196,000 (as of Feb, 2008) according to the Market Value Inflation formula.

The value of the house increased 30-32%, that is:

23% (the Toyota factor) + 2.5% for the remaining 3 years (Inflationary pressure)

Therefore, $150,000 + $46,500 = $196,000, or, a very good investment!

It is important to note that this formula is not a hard-and-fast RULE for value assessment of property however, it can help you test your own reality and ensure you are prepared for the potential value of your home. It is also a key part of our three step process for market value assessment.

A word about Renovations and “Flipping houses”

A Seller who needs or wishes to sell within 1-2 years of buying will be challenged to recover the costs associated with buying and selling houses (such sales commission, legal fees, moving expenses, etc).

Also, in terms of renovations, you cannot expect to receive dollar for dollar what you have put in to the house. Some improvements are simply considered good maintenance: Ensuring the home is in as good of shape as it was when you bought it, and generally keeping up to date with popular likes and dislikes. Major improvements will of course be considered separately by your Realtor. For example, a seller who has recently invested $10,000 in windows cannot necessarily expect to add $10,000 to the value of their property however, some minor aesthetic repairs and a fresh coat of paint may help the property sell faster, and ideally closer to asking price.

‘Flipping’ a house as a business includes different variables. Normally this is only possible if the house can be obtained though an opportunity to purchase below market value. A flipper must have access to inexpensive products and labour for renovations. Profit is also realized through tax benefits to being in the business of flipping.

This article reprinted courtesy of my team member and close ally, Drew Symons