5 FAQ About Real Estate Transactions

In my daily chats with prospective buyers and sellers, I find myself answering questions that range from: Is an open house really necessary? to When will I receive my money?.

In a seller’s market, which best describes today’s market – when there are more buyers than houses – there are some frequently asked questions that are common to most client conversations.

I chose the top five, to cover in this post.

Q:  How Is The Offer Price Determined?

A:    Getting the offer price right is crucial to whether or not you will end up with your dream home or possibility lose it. In today’s hot market, you have ONE shot….maybe two to get the price right.

What can you do?

• Hire an experienced real estate agent.
  I can’t say this enough. Regardless of what anyone says, experience does count. Homes are listed using a variety of pricing strategies and it requires the guidance of an experienced real estate agent to navigate you through the pricing complexities.
• Know your limit.
  In a seller’s market, multiple offers and bidding wars are commonplace.  Knowing your limit and communicating this to your real estate agent will be a deciding factor in putting in an offer and at what price.

Q:  Are These Housing Prices Insane Or What!?

A:    Yup, and you know what? Everyone (including Nonna) has an opinion about real estate prices. I like to use this analogy to put things into perspective:

The Blue Jays home opener is the biggest ticket in the city. Tickets are sold out in 5 minutes. Thousands of people are left without tickets and really want them.  Due to the demand people are willing to pay whatever it takes to be part of the action.  As a result resale prices sky-rocket, and the auction effect begins.

In a seller’ market, where home inventory is scarce, we find that for every single home for sale, there are at least THREE interested buyers. This is the auction effect that I was discussing, where the highest bidder takes all.

Q:  Are We Going To Be In Competition?

A:    The simple answer is likely Yes.

In prior years, there was always the option to pass on a home because of competition or there would be another house to look at. However, in this seller’s market, that’s not the case.

This is where having an experienced real estate agent as your advocate comes into play. We have the resources and it’s our job to know if a house has been priced too low to create an auction or well above market value.

It’s also our job to understand the competition so that we can advise our customers on the best strategies.

If competition isn’t your cup of tea, there is the option of purchasing a home in the slower times typically fall and winter when there are less buyers looking to purchase.

Q: How Long Do We Wait Before Putting In An Offer?

A:    In the current market, most sellers are receiving and reviewing offers on a specific day and time. However, not everyone follows the rules.

There are times when a real estate agent on behalf of their buyer will submit an offer earlier than instructed – this is what is fondly referred to as a ‘bully offer’. It could be so enticing that the sellers may choose to review the offer earlier than the others, or they may hold unto the offer.

While you are watching your own home and neighbourhood sales, professional real estate agents are watching the entire market. We’ve been following other house sales, market trends and the actions of other real estate agents.

It’s our job to set a strategy that will get your dream house and your budgeted price.

Q:  How Much Will My Home Sell For?

A:    As reported in the papers, final selling prices are unpredictable and in some cases totally out the window. Historical selling prices are no longer the benchmark for current prices. Because of the low supply and high demand we are finding in most cases that the final selling price lands well above the list price.

Here are some factors that play a role in the final selling price:

• Recent sale of a similar home in the area.  This is a great benchmark.
• Supply and Demand.  How many similar homes are on the market at the same time? And how much demand is there for this type of home?
• Location. Location. Location. We all know that one. But is the home in a desirable neighbourhood, close to schools, shopping, major roads, greenspace – those are the factors that come into play.
• Frequency of sales in a particular area.  Some areas have a high listing rate and others don’t.  Typically neighbourhoods or streets with very little turnover may yield a higher selling price because they are deemed ‘rare finds’.

When it comes to buying or selling your home, an experienced real estate agent is key to your success. They are interested in either obtaining top dollar for a seller, or purchasing a quality product at a reasonable price on behalf of their buyer.

It’s our job to understand the market, operate strategically in the best interests of our clients with razor sharp negotiating skills.

Our team of real estate sales professionals is committed to finding you, your dream home. Whether you’re looking to buy or sell, the Karen Paul team is here to help with any questions.