Contrary to popular belief…
When selling your home, its value is determined by one thing and one thing only
→ What a serious buyer is willing to pay for it.
No more and no less.
The bottom line, and inescapable truth is this:
Your home is never worth more than what a buyer is willing (and financially able) to pay.
So how do buyers decide what they’re willing to pay?
What buyers will be willing to pay for your home; in today’s market (i.e., what they think it’s worth) will be determined by comparing your home to the others for sale right now.
In other words:
Today’s competition determines today’s value of your home
Makes sense when you think about it, after all…
…No buyer can purchase a property that has already been sold – They can only purchase a home that is currently for sale.
You’ve actually already experienced this first-hand
When you bought your current home, how did you establish its value?
Think back:
- You probably had a budget?
- You probably had an idea of the kind of property you needed?
- You probably had an idea of where you wanted to live?
- You probably got out there and viewed all the properties that looked interesting within your affordability range?
- You probably consciously (or unconsciously) compared all these properties against one another and ended up buying the one that met your needs and gave you the most value for the price paid?
Does that sound familiar?
We hope so because we’re happy to report nothing has changed. Buyers still behave in exactly the same way today.
Key takeaway: Buying a house is a massive comparison-shopping exercise.
As such, the value of your home is not determined by:
- What you want for it.
- What a realtor may think it’s worth.
- What it costs to rebuild.
Instead, its value is determined by:
Buyers comparing it to the other homes available in the market at this exact moment in time.
In practical terms:
- Buyers visualise the value of one property versus the others available to buy, by comparing the features of each home for the price they are asking.
- Buyers do not prioritize what the seller’s opinion is of their property’s value.
- Buyers determine the intrinsic value to them by viewing properties and making their own judgments.
- In that regard, the value of your property (when it comes time to sell) simply reflects what buyers think it’s worth, despite what anyone else tells you
Bottom line: Today’s competition determines today’s value of your home.
This is exactly why we created the Bōde Comparables algorithm, so sellers can quickly find and compare the most similar homes to theirs.
Simply enter the details of your home, and you will instantly see the highest matched active (and sold) listings, ordered by highest match score.
Final Thoughts
Everyone has an opinion of what your home is worth.
But you’ll only know whose opinion was most accurate the day you exchange contracts with a committed buyer.
That said, the chart below shows you where opinions tend to lie in relation to market value.
Broadly speaking, buyers tend to believe the value to be lower and sellers believe it to be higher. The last time your home was for sale – you valued it more than anyone else in the market – that’s why you bought it.
An appraiser should be about spot on. You can find a short list of the best appraisers serving your local area in Bōde’s Prō Marketplace.
The 3 golden rules
Rule 1 – Today’s value is determined by today’s competition (it’s that simple).
A new property added to the market or removal of one, which has just sold changes the market. A buyer can now select the new property and the one that sold is no longer competing in today’s market.
Rule 2 – Opinions on home value are meaningless unless they are backed up with facts (and they have to be the ‘right’ facts at that):
- What similar homes historically sold for are facts.
- What similar homes recently sold for are facts.
- What similar homes you’ll be competing against are facts.
- What similar homes are failing to sell for are facts.
Rule 3 – ‘Recent’ sold prices are more accurate than ‘Historic’ sold prices when it comes to assessing what buyers (in the market right now) would be willing to pay for your home.
Want to Buy or Sell Your Home Without an Agent?
Welcome to Bōde
Bōde has created a marketplace to allow you to get transparent home data, set your price, and list your home on MLS (and 30+ more sites). We will advertise your home and walk you through the whole sale process for 1%, only when the home sells.
Looking to buy? Bōde allows users to purchase any home listed on MLS in Alberta – at completely no charge.
With your free Bōde account, you don’t need an agent – you are completely in charge of your home sale or purchase and get to keep more of the money you invested in your home!
Get started at bode.ca
