When the market is very hot, as it was earlier this year, there’s a fairly good chance you can sell your home for top dollar. Not every home will sell for top dollar even in a hot market, but the odds are heavily in your favour. This was proven again and again earlier this year.
But what happens when the market isn’t as hot? This is a very relevant question today because right now, while I’d say the market remains a strong sellers’ market in most instances, it’s far from being very hot. You may be hearing that the market is downright cool, but that’s simply not the case in central Toronto. Prices are still about 10-15% higher than they were last year at this time and there are still some, although not nearly as many, homes selling quickly for big prices. Now, don’t expect to sell your home for the highest price in history unless you’re selling in the hottest market in history, but you can still sell your home for top dollar under current market conditions. There are two ways to accomplish this.
The first way is to get lucky. Sometimes the right buyer appears at the right time with the right motivation and is willing to pay you top dollar. This could be a buyer who falls in love with your home for some personal reason specific to that buyer or a buyer who absolutely needs to buy a home that day and yours fits the bill. Luck definitely plays a role in the real estate market and it usually masquerades as emotion because emotion can make people do things they wouldn’t usually do if they were acting more rationally.
But let’s take luck out of the equation because we can’t control luck any more than we can control other people’s emotions. How then can you sell your home for top dollar in this market when most homes aren’t selling for top dollar?
Take a look at the home in the photo which our clients, let’s call them Ali and Jordan, recently sold. Pretty, isn’t it? They received eight offers and sold it for about 20% above list price. This price was as good as they could have expected had they sold it when the market was very hot earlier in the year. Was it a unique, one of a kind home that someone fell head over heels in love with? No. Was it stunningly renovated inside? No. Was it priced ridiculously low to attract multiple offers? No. So what, then?
After the deal was done, Ali, Jordan and I were talking about what caused their home to sell for such a good price. What we determined is that they made their money when they bought their home about fourteen years earlier because they bought a home with great resale potential.
Because I’m a real estate SALESperson, you may be surprised to learn that I often hear myself telling my clients “This is a nice home, but I’d suggest you not buy it. It might be difficult to sell if the market isn’t very hot when you want to move because of _______ (insert undesirable feature here) so let’s try to find you something better.” It’s not that I don’t want them to buy a home. I truly do. But I want them to buy the right home. And the right home isn’t only a home they’ll love. It’s a home that’ll have good resale potential because the market isn’t always going to be very hot and the last thing you want is to be stuck with a home you can’t sell when you’re ready to move.
I trust my clients to know what they like in a home, but it’s my job to advise them about resale value. Watching what sells and what doesn’t sell in different markets for over twenty five years has taught me what has good resale value and what doesn’t. I’ll often hear myself saying something like “I can see why you like this home. The kitchen is stunning and the bathroom is amazing, but if you want to sell in five years and the market isn’t very hot buyers aren’t going to fall in love with your kitchen and bathroom because they’ll be dated and they’ll hesitate to buy your home because it backs onto a school (or an apartment building or a parking lot….).”
To understand the concept of good resale value, you have to understand the psychology of buyers under different market conditions. When the market is very hot, buyers think “If I don’t buy this home today I’ll have to pay $100,000 more for the same home next month so I don’t care how much I pay because if I don’t buy THIS home TODAY I may never be able to buy a home.” This buyer is willing to overlook all sorts of shortcomings. But when the market isn’t very hot, most buyers are thinking “I like this home, but it’s not perfect so I’ll either try to get it at a good price or I’ll wait for another home.” The difference is that buyers are less desperate and more discerning.
Ali and Jordan were very smart when they bought their home. They bought a home they loved that also had very few shortcomings so when it came time to sell it had wide appeal. Every home has shortcomings. It just depends on what they are. Most buyers will accept shortcomings that are minor in nature. Shortcomings that require significant money to fix will be acceptable to some buyers, but not to others. Examples of these would be basements that are too low or kitchens without enough cupboard space. But there’s a class of shortcoming that can’t be fixed at all. Can you guess what this class is? Right, the three most important things to look for in real estate – location, location and location. You can renovate a kitchen or a bathroom, you can dig down a basement, you can even put an addition on if the home is too small – these shortcomings can be remedied at a price – but you can’t change your home’s location. And when the market’s not very hot and you’re dealing with discerning buyers, some of them will shy away from homes that are close to or on a busy street, next to a low rise apartment building or backing onto a school, a parking lot or a commercial building.
What should you take away from this? If you’d like to give yourself the best chance of selling your home for top dollar under current market conditions (whatever current market conditions may be) without having to rely on luck, don’t wait until you start preparing your home for market. Start when you buy your home. Be discerning. Look for a home you love, but also look for a home with great resale value like Ali and Jordan did. You’ll be happy you did.
If you know anyone who is interested in learning how the market works and would like to receive the kind of help that involves honest answers, straightforward advice, no pressure and being treated like family, please let me know the best way for me to connect with them because I’d like to offer them this kind of help. And as always, don’t be shy if you have any questions or comments about this post! Thanks for reading.