Kingston and Area home sales edge higher, new listings jump in November
Home sales recorded through the MLS® System of the Kingston and Area Real Estate Association posted a small year-over-year increase in November 2015.
Residential property sales numbered 193 units in November, up 2.1 per cent (four sales) from the same month a year earlier. On a year-to-date basis home sales are currently running six per cent ahead of the first 11 months of 2014.
“While home sales came in above year-ago levels in November, it did mark a slowdown from activity in August, September and October,” said Jack Green, President of the Kingston and Area Real Estate Association. “Overall for 2015, the big picture for both sales activity and price growth is that it’s been a decent year for both, although they probably looked a bit stronger than they actually were in comparison to a subdued 2014.”
The average price for homes sold through the Association’s MLS® System in November 2015 was $273,993, down 1.1 per cent from November 2014. The less volatile year-to-date average sale price was $292,977, an increase of 3.7 per cent from the first 11 months of 2014.
There were 537 new residential listings on the Association’s MLS® System in November 2015, jumping 37 per cent from last November and marking a new record for the month.
Active residential listings on the Association’s MLS® System numbered 1,697 units at the end of November, down 8.7 per cent from the end of November 2014.
There were 8.8 months of inventory at the end of November 2015, down from 9.8 months at the end of November 2014 but above the long-run average for this time of the year. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity.
The value of all home sales was $52.9 million in November 2015, an increase of one per cent from a year earlier.
Sales of all types of properties numbered 224 units in November, rising 5.2 per cent on a year-over-year basis. The total value of all property sales increased 4.5 per cent from a year earlier to $61.1 million in November.
Source: Canadian Real Estate Association
The Canadian Real Estate Association tracks rate changes (or not) in the Bank of Canada’s overnight lending rate and summarizes key points on economic growth and inflation here.
Buyers are savvy!
They’ve done their research, they’ve looked (at least online) at all the other homes in your price range. If you’re selling an updated, 1800 sqare foot, 3-bedroom, 2-1/2 bath home with a finished basement and nice yard in a good neighbourhood, and you’re priced $20,000 above all the other similar homes, the buyers are already on to you!
Buyers who can afford to pay your extra $20,000 will be comparing your home to similarly priced homes, which will be larger, more upgraded, or in an even more desirable location – you can’t compete! Best to stack up against similar homes, or they’ll all be sold by the time you decide to drop your price.
The seller (you) becomes the buyer!
Chances are, if you’re selling your home you are also about to buy another! When you find a home you like, you’ll be asking yourself two main questions about the price:
- Can I get a similar home for less money?
- Can I get more for the same price?
If the answer to either of these questions is yes, you will be unlikely to make an offer, no matter how much you love the home.
Most buyers will not make a low-ball offer
A quick internet search will reveal the main reason: they do not want to offend the seller. They would rather keep on looking, or purchase a home that isn’t quite as good a fit, just to avoid offending you.
Probably the second biggest reason they don’t make an offer is they figure you’re out of touch with reality thinking that your home is worth more that comparable homes. In short, they just don’t want to deal with you. Negotiations are very emotionally taxing, and buyers would rather avoid the additional stress of dealing with a difficult seller. You aren’t difficult, but they don’t know that!
Time is of the essence
For the reasons we’ve outlined above, an overpriced home often experiences few showings and no offers…even if it’s only inflated by 2 or 3 percent! If it takes too long to bring down the price, buyers will be wary and reject the property because they think something is wrong with it. One of the most common questions we are asked by buyers: “How long has it been on the market?”
In a worst-case scenario, a seller runs out of time and has to drop the price below market value. They would have been better off to list at market value and saved time, money and a lot of stress.
Each month at midpoint, the Canadian Real Estate Association provides resale data from the previous months to inform members and the public.
A buyer’s market and its opposite, a seller’s market, are terms defined by a statistical measure.
In most Canadian markets, a buyer’s market occurs when the sales-to-listing ration is 35% or less (or approximately 7 sales to every 20 listings). This is a market when there are more homes for sale than there are buyers; it’s a market where prices will drop over time as home owners become more and more eager to sell their property.
In such a market, your home may take longer to sell and you will have less negotiating power in terms of the selling price. Fortunately, you will be in the driver’s seat when making an offer on your next home.
A seller’s market, occurs when the sales-to-listings ratio reaches 55% or more (or approximately three sales to every five listings). Seller’s market occurs when there are a lot of qualified buyers in the market place, like when interest rates are low, and not enough homes for sale in the market. When these conditions occur, bidding wars will drive up prices as multiple offers come in on sought-after properties.
Toronto and Hamilton have experienced seller’s markets for the last few years.
As a seller, you will probably have more negotiating power and obtain a higher selling price for your property. Unfortunately, you will be on the other side of the fence when purchasing your next home.
The number of homes on the market is roughly equal to the number of buyers (supply equals demand). In this market, prices are stable and homes sell within a reasonable period of time. It is a calm atmosphere with buyers having a satisfactory number of homes from which to choose.
Kingston has been feeling like a buyer’s market the last few years, but actually the prices have been fairly stable and even increasing slowly. It’s not the market we had been used to, with a steady increase in prices for years and years, but it is still quite healthy.
There are lots of stories online and in print touting the benefits of selling your home yourself, without using a real estate salesperson. Do-it-yourself property sales companies promise that you’ll save thousands of dollars in commissions.
What most home sellers on that path don’t know, however, can land them in major litigation and financial loss. DIY property sales companies will barely touch the subject or avoid it entirely.
Kim Rempel, investor, writer, and entrepreneur goes on to describe in this article the trouble that has befallen many sellers when they have tried to save money by listing their own home.
But it seems simple enough?
While the mechanics of listing a home may seem simple on the surface, what many people forget is that your Realtor® is covered by insurance. This means that if something goes wrong, you have somebody to hold accountable, and through the professional insurance coverage, you can be compensated. When you represent yourself, not only are you at a higher risk of unknowingly making a mistake, but you stand to lose much more money than you thought you were saving on commission.
It doesn’t save you money
On a $350,000 home, a commission in Kingston will run you about $14,000. Remember, half of that goes to the agent who brings the buyer, so that will not be savings. Even if a buyer comes to you privately, they are expecting a deal compared to homes that are marketed through a brokerage; they know you don’t have to pay a commission and they want to reap at least half of that benefit.
Of the remaining $7000, you will now have higher legal fees, because you will need to (and should!) run all offers and counter-offers by a professional to ensure you are covered.
It is a lot of work
Before she became a licensed Realtor®, Annalise didn’t think it took any work to list a home. She and her military colleagues would remark how much money was paid to an agent by the Defense relocation program just for taking a few photos and sticking a sign in the front yard. Luckily Annalise is a hard worker, or she would have been very disappointed about her second career!
Fielding phone calls, emails, and text messages from interested buyers and other agents takes time. Putting a sign up takes time. Advertising takes time. No individual task is rocket science, but they all add up, especially when you do not have a lot of experience in setting up a system. Selling, buying and moving take up a lot of time over and above daily tasks at work and home, and you are best served by an agent whose full-time job is to actively market your home.
Offers are slow in coming
The other thing that takes longer when listing yourself is getting an offer. When agents search the listing system in the Kingston area, your listing will not show up. Many “For Sale By Owner” services will get you on the Multiple Listing Service (MLS® at realtor.ca), but you are not listed in the local board. The services generally list from the Toronto Real Estate Board. Agents prefer to search their own system because the search parameters are more customizable and details are more complete than what is available to the public. For buyers working with an agent (92%), your listing can easily be missed.
The other benefit of working with an agent is knowing exactly how much comparable homes have sold for. A private seller may have tracked active listings in the area, but homes do not sell at list price, they almost always sell $5-10,000 below on an average home in Kingston. Without all the information, and experience in comparative market analysis, private sellers almost always list their homes to high.
(For more on the perils of listing too high, see our related article).
Finally, buyers find it very awkward to deal directly with sellers. They don’t like going through a home with the owner present because they feel they are intruding. Even if the home has been “depersonalized” and staged correctly (also uncommon in private sales), buyers often rush through a showing, and more of their attention is spent on avoiding the seller (or being overheard) than on the features of the home. When people do not feel comfortable in a home, they will they they don’t want to buy it!
Is it theoretically possible to save a portion of the real estate commission by listing privately? Perhaps. Is it worth the risks? The experts say no.
As you may have read in our post about pricing right the first time, the longer your home stays on the market, the less it will sell for.
According to the National Association of Realtors®, “Recent sellers typically sold their homes for 98% of the listing price, and 43% reported reducing the asking price at least once.” Why did they reduce their price? Because their home was not selling as quickly as other comparable homes.
The reason your agent is trying to sell your home as quickly as possible isn’t necessarily because he or she just wants to have it over and done with. Realtors® know that homes sell quickly when they are priced correctly and staged according to the typical buyer’s eye. The longer your home stays on the market, the lower the eventual selling price.
Take advantage of the market
In 2014, the Kingston market experienced a very bizarre pattern. After flat sales in the previous years (sellers were lucky to break even if they bought in 2012 and sold in 2013), the early spring of 2014 was looking like a good, healthy rebound. Homes that listed in February and March were selling for more than the previous year, and things seemed back on track. However, by June when the market was saturated with listings, prices were already dropping. By August, 3-year-old home with nearly exact specifications as one that had sold in March was now listed around the price that the earlier home had sold, and eventually sold for $5-10,000 less. What a difference a couple of months can make!
This is why we help you list your home as soon as you are ready, and at a competitive price. We don’t want you to be the August sellers who have already had to dig deep on one or more price reductions because the original price was too aggressive for the market.
Less time, less stress
As sales representatives who care about you, we try to save you stress! The quicker the sale, the less the stress builds up. If you are purchasing a new home, you are going to need stamina for the buying process, especially if you are relocating to a new area and starting a new job.
Moving on to life’s next big thing can be pretty exciting, but the stress around buying and selling real estate can have a dampening effect.
We are available to you all year round and have all the time in the world for your home to sell. We can accommodate you if you are not in any rush to sell and really want to take your time and feel out the market for yourself. However, the secret we have learned by repeating the listing process many, many times is that the “right buyer” will come along only when the price is right.