How to Accurately Price Your Calgary Home
Conducting a Comparative Market Analysis (CMA) is the crucial step in determining the market value of your Calgary home. Here’s a step-by-step guide on how to conduct a CMA and this will allow you to accurately price your Calgary Home. Get your pencils ready and let’s dive in:
How to Accurately Price Your Calgary Home
1. Gather Data
Start by collecting data on recent sales of similar properties (comparables) in the same neighborhood or area as your subject property. Look for properties that are similar in size, age, condition, and features. Where can you find this data? For residential homes, you need to pull sales from the multiple listing services (MLS) in your area as this will be the most accurate set of data on recent sales. You cannot accurately price your Calgary Home without accurate sales data.
2. Analyze Market Trends:
Consider the current market conditions in Calgary. Grab the sales data and calculate the Absorption Rate (inventory divided by sales in the given market area). This will show you whether it is a seller’s market or a buyer’s market or if you are somewhere in the middle. When you understand which market you are in (seller/buyer/balanced) then you can also apply macro adjustments to the pricing you are working on.
3. Select Comparable Properties:
Choose a minimum of three, but hopefully, at least 6 or 8 comparable properties that very closely resemble your subject property in terms of location, size, features, and condition. These homes should ideally have sold within the past 30 to 90 days to be relevant data points.
4. Adjust for Differences:
Now get your realtor or appraiser hat on. You need to analyze the similarities and differences between your subject property and the comparables. Adjust the sale prices up or down depending on the changes or variances you find. For example, land size, square footage, walk-out basement, bedrooms, bathrooms, condition, upgrades, repairs needed, busy roadways — all of these have a direct market value impact on assessing value adjustments. The list is quite extensive but you have to adjust for all factors that have market value.
For example, if a comparable property has an additional bedroom or bathroom, adjust its sale price upward to reflect the added value compared to the subject property. A good point of reference in Calgary is $10,000 per bedroom. How do you know what other values are for adjustment? That boils down to asking experts in the industry who have experience.
5. Calculate Adjusted Sale Prices:
Apply adjustments to the sale prices of the comparable properties based on the identified differences. This means adding or subtracting amounts from the sale prices to account for the differences you have determined.
For example:
i) Comparable property has a walkout basement and your subject property does not. Then you have to ADD value to your comparable property.
ii) Your subject property has a bonus room and the comparable property does not. Then you need to DEDUCT value from your comparable property.
You need to do this for all the differences found. When done, now you can calculate the adjusted sale prices for each comparable property to arrive at a more accurate estimate of their value relative to your subject property.
6. Determine a Price Range:
Based on the adjusted sale prices of the comparable properties, you now have a ton of data to look at. You can calculate an average or perhaps median price. You can calculate the price per foot. You can get a range of low and high values. Depending on the type of market you are in, you now have to determine a price range for your subject property. Is it a seller’s market and you can bump the value up a bit? Or is it a buyer’s market and you have to adjust the price down? This all comes down to the math and the type of market. Be realistic !! Do not overvalue your property because you own it.
How do you know if you have accurately priced your Calgary Home? Ultimately the market will determine if you are accurate in your pricing. In a healthy sales market, pricing is driven by supply and demand. If you are not getting the number you want, then the market is telling you your price is too high.
Feel confident and ready to go? Now you know the steps so you can accurately price your Calgary Home. Get the data and dig in!
Or maybe you are tired of all this math and adjusting and want a professional home buyer to talk to? We at CalgaryCashBuyers are always here for you. We will calculate the price of your home using the methods above, and make you a fair cash offer. We always buy your home for cash. Call us today and say hello to a quick home sale.
Looking to Sell? Call Us TODAY 403-283-6777.
