Setting your price
The asking price is key to selling your property successfully. Unlike the method you choose for selling, your price does impact the amount of time it takes to attract a buyer. You should be aware that a property’s value is affected by its location, size, condition and finishes, but also by the market’s vitality. So the fair price may fluctuate depending on when you’re selling.
There are generally 2 steps involved in establishing your asking price. First, you find your property’s market value through a comparative market analysis, that is, by analyzing comparable properties. Then, you set a price that will be competitive on the current market. You can only benefit from using this approach, because a property will be considered by more buyers if the amount asked for is realistic and competitive.
1. Using comparables
Analyzing comparable properties is the method of choice for experts and owners wanting to estimate the value of a property. In real estate jargon, “comparables” are homes similar to yours that have recently sold in your area. They’re used to do a comparative market analysis to help determine what your property’s asking price should be.
Follow these 3 steps:
1. List the characteristics of your property (surface area, year built, number of rooms, etc.).
2. Research properties similar to yours that have sold in your area (so-called “comparables”).
3. Determine your property’s position (in terms of its advantages and disadvantages) relative to these comparables to establish its market value.
DuProprio’s appraisal assistance tools
You’ll find comparable sold properties in the My Price section. You can view most of the properties on our site, including their price, selling time, photos and description.
In that same section, you’ll find all the Appraisal assistance tools available, depending on the package you selected. These tools will help you determine the fair market value of your property and justify your price with potential buyers during the negotiations.
NB: Real estate transactions for all buildings are publicly available on the provincial land registry site: Registre foncier du Québec.
2. Know your competition
Once you’ve established your property’s market value, you should adjust the price by taking a look at the properties currently for sale in your area. If they have the same characteristics as yours, they are your competitors..
Your strategy for reacting to the competition will depend on your needs. Sellers needing to move their property quickly should check out competitors very carefully and set a price that’s more attractive to buyers.
Negotiation margin
Your price should include a margin for negotiation. Our statistics show that, on average, our clients sell 2–3% below the list price.
Find out more in the article Negotiating.
Price bracket
Remember that your goal is to attract the attention of the right potential buyers. Knowing that buyers search by price bracket, be sure your price allows your listing to show up in the search results (including budget) of people looking for your type of property. Strategically, if you want to get $290,000 for your property, you’ll want your listing to appear in the $275,000–$300,000 bracket.
What you need to know about price brackets
- On DuProprio.com, searching by price is done in $25,000 increments for properties with a price under $500,000, and by $50,000 increments for properties listed at up to $1 million. After that, the brackets are by million.
- When a property is priced exactly at the limit of a price bracket, e.g., $300,000, then it will show up in searches for both the higher and lower brackets: $275,000–300,000 and $300,000–325,000.
The municipal evaluation
Your municipal evaluation is not a good indicator to determine the current market value of your house or condo. Its only purpose is to calculate the amount of municipal tax the future owner will pay. Using this evaluation can be misleading. First, because the market is likely to have fluctuated considerably since the time of your last municipal roll. And second, because you may have done some work since the municipal inspector’s last visit. This can lead to a difference between a property’s municipal value and its market value.
Chartered appraiser
If your property has unique features, it’s possible you won’t find similar properties to help you in your comparative market analysis. If that happens, you should use the services of a chartered appraiser. They’ll give you an appraisal report and a professional, neutral opinion.
Find out more in the article Chartered appraiser.
The qualities of a good price
If you’ve carefully followed the above procedure to set your asking price, it should meet the following criteria. Don’t hesitate to check these regularly, especially if you’re considering lowering your price.
1. The asking price is competitive
To attract potential buyers and stand out from the other properties for sale in your area, your asking price must be competitive. Here’s an example. Say you notice that properties similar to yours are currently selling for $235,000 to $245,000 in your area. To make sure your home will be considered by potential buyers, you should set a similar or lower price.
Since the market is always fluctuating, keep an eye on it and on competitor properties regularly and adjust your price if need be.
2. The asking price is realistic
The price you ask for must reflect the property’s fair market value. To make sure this is the case, you have to take into account the property’s characteristics and the market’s vitality, and you should not inflate the price with an overly large negotiation margin.
Listing a good price as soon as you put your property on the market will prevent you from having to lower the price several times, which may undermine buyers’ confidence.
3. The asking price is objective
Your price must be based on objective criteria, like the property’s location, size and condition, not on your own personal preferences, like its aesthetic aspects.
Because a property conjures up memories and emotions, it’s difficult to stay objective when setting the price. Here’s a tip: try changing roles. Put yourself in the buyer’s shoes, and try to stay impartial.
4. The asking price is justified
When you’re negotiating with a buyer, you should be able to explain how you calculated your price (and provide proof to support your arguments). You must also be able to justify any price difference between your property and others similar to yours.
FAQ
What do I do when new properties come on the market with a lower price?
The market is constantly changing. You must be able to adapt to new market conditions or to competitors offering lower prices. That doesn’t mean having to change your asking price right away. It’s possible that a competitor will find a buyer faster than you simply because they chose a more aggressive strategy. But if you see that all your competitors are listing prices lower than yours, it may be a sign that the market is changing.
How long should I wait before reviewing my asking price?
When you realize that your price isn’t working, you should change it as quickly as possible. This will give you more visibility with your pool of potential buyers and may give you extra exposure thanks to email alerts.
Find out more in the article Lowering your price.
Does a property sell for less without a real estate broker?
No. Whether the property is sold by the owner or an agent, it’s the same property. Its value doesn’t change according to how it’s sold but according to its location, condition and size as well as the state of the market.
Should I set a higher asking price knowing that buyers will negotiate?
No. It’s to your advantage to set a fair price as soon as you put your property on the market. Setting an inflated price to test out the market makes the price less competitive and therefore less attractive to potential buyers. You should list a price that reflects the property’s fair market value right from the start, to avoid having to reduce the price again and again, which can affect buyers’ confidence.
My municipal assessment has just increased. Do I have to increase my selling price?
The municipal assessment does not reflect the current market value of the property. It is used to establish your tax rate and should not be considered in choosing your selling price.
My municipal evaluation just increased. Should I increase my asking price?
Unlike DuProprio, real estate agencies do not post sold comparables or information about those properties on their websites. But you should be aware that all real estate transactions are posted in the provincial land registry. This information is publicly available for an administrative fee of $1 per consultation.
Consult the registry (French only)