In real estate, we’re prone to hyperbole.
Consider it an occupational hazard, but we rarely encounter real estate agents that don’t focus overwhelmingly on the positive aspects of the home when they describe a listing.
It is, of course, a listing agent’s job to sell the home. If you were a seller and your agent was focusing on the negatives, you’d rightly be a little irritated. At the same time, one reason that the public in general looks at real estate agents with scepticism is because of the hyperbole in marketing material.
- That house is indeed “steps to the beach” but if you counted the steps, it would probably be around 2,000 steps to the beach.
- The condo with “CN Tower views” does indeed have a window where you can see the CN Tower, as long as you don’t mind stepping up on the toilet in order to look to the left.
- The “backyard oasis retreat” may have some plants and a water feature, but the multiplex overlooking it makes it feel less like a retreat and more like a public park.
One of the biggest dangers in listing a home for sale is that the seller or their agent (or both!) begin to believe their own marketing and start to willfully ignore less positive aspects of a home. We say that is dangerous, because having a unrealistic view of the appeal and value of a property often results in over pricing the home and an eventual sale price that is considerably less than what they could have received if they priced it properly from the beginning.
In our years working in real estate, we’ve identified the three most common blind spots that sellers and listing agents have when it comes to properties they’re trying to sell. Let’s take a look!
Blindspot #1 – It doesn’t tick all the boxes.
We’ll start with what we feel is the most important blind spot that sellers can have with their homes, when they don’t understand that their home doesn’t tick all the boxes.
Every type of home has a specific checklist of things that, if the home has them, means it ticks all the boxes. For freehold homes the short list includes things like:
- More than one bathroom
- A finished basement
- Private parking
- Three or more bedrooms
For condo apartments, the list includes things like:
- A balcony
- A parking spot
- A locker
- A useable den
We can of course add lots more desirable features for any property type onto a longer list, but there is always a short list of things that the majority of buyers want in a home.
When a home is lacking one or more of the items on this short checklist, it absolutely impacts the appeal and therefore value of the home. We often see sellers and their agents who are willfully dismissing the fact that the property doesn’t tick all the crucial boxes and using comparables that are properties that have everything on the list.
If your home is missing something that the majority of buyers want, then that needs to be acknowledged in the value of the home. Dismissing the fact that the house doesn’t have a finished basement or that condo doesn’t have a balcony and pretending it still is appealing as homes that tick all the boxes is a terrible idea.
Blindspot #2 – Not exactly the ideal version.
The second most common blind spot has to do with the fact that a home having an attribute doesn’t mean it’s necessarily the best version of that attribute.
If a seller thinks they should command the same interest and price for their condo as the one that just sold last week, the question is are they actually similar? Consider two condo units that, at first glance, seem very similar. Both are two-bedroom, one washroom condos with a balcony. Unit #1 is 972 sf, with a larger living room, two good sized bedrooms and a 400sf terrace. Unit #2 is 716 sf, with a combined living and dining room, one normal bedroom and one small bedroom, and a 80sf balcony. While both are technically similar, the level of their appeal to buyers is quite different.
Apart from quantitative differences like square footage, sellers also often tend to overlook the difference in design, layout and quality of finishes. You can have a $1,000 stainless steel fridge or a $10,000 stainless steel fridge, and there are tremendous differences in how a home shows and feels based on the interior design, the way the home is laid out and how much money was put into the finishes.
When listing agents or sellers fail to consider the quality of the home and it’s appeal (or lack thereof) and simply compare against another home that is technically similar, it can result in significant mispricing of a home.
Blindspot #3 – That was then, this is now.
The final biggest blind spot has to do with failing to understand that the times have changed. Whether it is a shifting market where the price a similar property received a month or two ago is no longer relevant (whether in terms of a higher or lower price), or failing to realize that the renovations done a few years ago no longer appeal to most buyers, it is crucial to acknowledge the passing of time.
There is a saying in real estate – sellers live in the past and buyers live in the future. At its heart, this means that for a seller, they look to what neighbours received when they sold and what a home is worth now, whereas buyers are concerned about what it will be worth next year or when they eventually sell.
We often see real estate listings where the renovations, while of a good quality, were done years ago and now appear out of date. When a seller is focused on how much they spent ten years ago on that kitchen, and doesn’t want to admit that no new renovations would use the same design, it creates a blind spot with unreasonable expectations for the current value for that renovation.
In our conversations with listing agents where the price seems out of line with the market, we often find the listing agent is relying on older sales that no longer reflect the current conditions. Sometimes it means a buyer can get a bargain, as the listing agent doesn’t understand that the market has continued to go up since that sale. In other cases, the agent is advising their seller client to expect the same price as a neighbour got before the market shifted and prices lowered, and it does not bode well for a successful sale.
Whether you’re a buyer or a seller, avoiding blind spots is incredibly important if you are going to get the best result. We know how to work with our clients to make sure we see things clearly and we’d love to help you move forward. Get in touch with us to discuss next steps!