The Ottawa real estate market has gone through some big changes over the past 5 years and especially over the past 2 years. In this post I will try to shed some light on what a list price is, how they are determined and how to find the true value of a property.
First a little bit of history. Up until a few years ago a list price (the posted price you see on Realtor.ca) represented the sellers target sale price plus or minus 1-5%. So if you saw a home listed at $750,000 this meant that the sellers would be willing to sell and close the deal at or close to the list price.
As real estate prices in Ottawa started their upward trajectory the list price became more of an initial marketing price. Nowadays you will see a lot of homes for sale with a list price that is significantly lower than the price the sellers are willing to accept. This is done for a few reasons, the first being to generate more interest in the home. The second reason is that prices are changing really fast and sellers will simply take the highest offer for their home. For example a home could be listed at $699,000 and sell for $740,000 or $900,000. The list price in that case is simply the starting price.
The question becomes how do you know what a home is worth in this market and how can you decipher if the list price is a marketing price or a realistic price that the sellers would accept. There are few ways to do this. A real estate agent can help you put a range value on a property by looking at recent sales in the neighbourhood and and doing a comprehensive CMA (comparative market analysis).
Some tell tails signs that the list price is a marketing price is when you see offers being accepted on a specific date. This usually means that the home will generate multiple offers and in that case the list price is the starting point. Some listings will mention that the list price is set at the market price. In that case the list price is a more reliable indicator of the final sale price.
In the end, the value of a home is determined by how much a buyer is willing to pay for it. List prices are irrelevant in terms of actual value. Sold prices represent a far better indicator of the value of a property.
Please feel free to contact me if you have any questions (firstname.lastname@example.org or 613.263.7883).
I wish everyone success in the upcoming spring real estate market in Ottawa.