Clock by Lee Haywood
“When is the best time to put my house on the market?” We can’t tell you how many times we’ve been asked this question. Most home sellers think the best time to sell their house is “when the tulips come up” because that’s when their house shows at its best. The reality is when the tulips come up you’ve already missed the critical period to get top dollar for your house. Real estate prices are influenced by many factors, supply and demand is one of the most important.
Supply is much lower from early January through mid April after which time many sellers put their houses on the market because that’s when they believe the spring market starts. But every other seller thinks that too, hence increased supply gives buyers more choice and sellers lower selling prices.
The graph at the top published by The National Post shows the monthly distribution of sales averaged over 40 years in Toronto. The pattern of sales for a typical year resembles two humps of a camel. The number of transactions tends to rise beginning in January to the end of March. Sales then decline slowly until August, the heart of the summer months. They pick up again in September through November then slow down for the holiday season. These are average results but there are occasional exceptions. We have experienced years where the activity was very high in the summer months for example and in December when real estate activity is usually slow.
There are other factors that affect the real estate market that are beyond our control:
Fluctuations in mortgage interest rates have a major impact on the real estate market. When interest rates fall, the cost to carry a mortgage decreases so buyer’s can afford to pay more for a house which creates higher demand and pushes prices up. Conversely, as interest rates rise, the cost to obtain a mortgage increases, thus lowering demand and prices of real estate.
Health of the Economy
This is influenced by a number of things including employment figures, personal debt levels and state of world economies as witnessed by the recent European crisis. From September 2008 to March 2009 we experienced firsthand how world economies can influence the Toronto real estate market. The financial crisis in the US triggered government bank bailouts and brought our real estate market to a quick, albeit, temporary halt. Fear and uncertainly gripped everyone, demand dropped significantly, and Toronto real estate prices dropped at least 15% in a matter of six months.
Changes to mortgage rules, as happened in July 2012, affecting down payment levels and amortization periods can greatly influence affordability and real estate values as well. The effect of these changes became evident in the fall of 2012 when sales volumes fell significantly. The government implemented these changes to stem household debt levels and to cool the housing market and these changes served their intended purpose. Other factors such as the increase in taxes on the sale of homes such as the recent Toronto land transfer tax, increase in property taxes and other fees all affect real estate prices as well.
So far we have discussed big picture issues that affect real estate values but there are additional timing considerations that will influence the price you ultimately get for your house. Did you know the day of the week and the actual week you pick to list your house can impact your sale price? Did you know the actual day you pick to consider offers can impact the final sale price? We carefully analyze these factors when we execute our thorough business plan to achieve the highest sale price for your house.
Any or all of the above factors that affect real estate values may be in play at any time. The following case study will show you how quickly shifts can take place, playing havoc on the final sale price. There is no substitute for experience when it comes to getting you the highest sale price:
Case study: We listed a property for $739,000 in a frenzied seller’s market and stated we would consider offers the following Tuesday. To our dismay Tuesday came and went with no buyer interest. This was surprising because, we believed, the property was correctly priced and would attract interest. For a few days after the offer date we noticed the number of appointments to view the property had dropped significantly, on our other listings as well, and there seemed to be a shift in the market. Believe it or not this is how quickly the market can change significantly lowering or raising sale prices overnight. We quickly assessed the shift and recommended to our client, the seller, that we reduce the price immediately to $719,000. They took our recommendation, we created a buzz about the price reduction and within 24 hours we procured 3 offers on the property and sold it for $741,000. There were a few other properties for sale with different brokers in the area at the time and, because the agents were not attuned to the unexpected market shift, their listings took many more weeks to sell and sold well below the list price. These agents did not have either the wisdom or savvy to read the signals and weren’t able to act in a timely way.
This case study demonstrates how as experienced and astute listing agents we can read the tea leaves, quickly assess the shift and act swiftly to fulfill our quarantee – to produce results. An agent who does not list many houses, is not plugged in or is new in the business cannot possibly be in tune with the swift shifts that can occur and the impact they have on the final sale price.
The moral of the story is that timing IS everything but assessing the right time is also an “instinct” that only comes with experience. We will use our expert analysis skills to advise you on the best time to put your house on the market and stay in tune with market shifts to make the best recommendations to get you the highest sale price possible. These are not just empty words. We continue to deliver year after year and our track record speaks for itself.