Homeowners who wish to sell their home or condo should know the fair value of their property to set the selling price and to negotiate more effectively. Sometimes, homeowners will set the price according to their own calculations. This method is feasible, but not foolproof.
Many people rely on the municipal assessment to set their property’s market value. Bad idea. The real estate market evolves every day, whereas the municipal assessment services, bound by bureaucracy, are slower. Consequently, there is a gap between the fair price of the property and the municipal assessment. Oftentimes, this assessment is inferior to the true property price. The municipal assessment reflects the fair value of the property, but not the value itself.
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Some rely on a very popular practice: finding a property that is similar to theirs that has been sold, not too long ago, in the same neighbourhood. The property must be, if possible, identical or nearly the same. Same type of home, same year of construction, same living space, same lot size, same outdoor layout (pool and other installations), etc.[……]
“There is never a single fixed price. Every property has both a floor and ceiling price,” says Patrick Juanéda, President of the Québec Federation of Real Estate Boards (FCIQ). On one hand, the seller wants to close the deal and obtain the amount closest to the ceiling price. While on the other, the buyer wants to pay something closer to the floor price. Irreconcilable differences? Not at all. Finding common ground is entirely possible, and that’s what successful negotiating is all about.
The power of negotiation
“The price is always negotiable,” says Mr. Juanéda. Expect the average reduction percentage to be from 2 to 3%.”
The real estate expert does stress however that each situation is unique: “If a house is listed at a “good price” (near the floor price) and it’s located in an active market (single family homes around $300,000, for example) overbidding can’t be ruled out. Do you really want to miss out to save a few thousand dollars?”
On the other hand, you have more room to manoeuver with a property that has been on the market for over six months and seen little activity.
Recognizing various scenarios forms the basis of any negotiation. A qualified real estate agent has the experience and instinct to guide the buyer. Without one, you’d have to study the local house listings and visit a lot of properties to develop a flair for negotiation.[……]