Markham Real Estate Today with Asif Khan

The headline in the March 26th edition of The Financial Post reads "Listing Prices Mean Nothing". With the current state of our Real Estate Market and bidding wars all around, the headline seems intriguing. Surely the article must be informative and include accurate facts. Or has it just been inserted to boost sales as newspapers struggle for survival?

The writer of this column goes on to state "the concept of an asking price is becoming virtually meaningless" and "realtors are so out of touch that they can't price homes properly".

It's ironic that this columnist is accusing Real Estate Professionals as the ones being out of touch. The only valid point made in this article is that the market is moving fast. It is inferred that Realtors are to blame for the increased demand for homes and that they are deliberately under pricing homes to create this multiple offer phenomenon. The fact that a home may sell for 20% above the list price is not an indication that the realtor was off base with the listing price. The Toronto Real Estate Board average for selling price vs asking price in the first three months of 2012 is 100% of asking. Simple math would confirm that if some homes are selling above list, there are that many selling under asking price.

What the writer strategically avoids in his effort to sway the general public's perception of a Realtor's credibility, is that price is a direct reflection of supply and demand and that no individual can dictate market price. Sale prices are mainly determined by economics. When inventory is running low, there will obviously be an increase in demand and thus an increase in price. Vice versa, when there is a surplus of inventory, demand decreases and so do prices.

In a balanced market where supply and demand are equal, homes will sell for market value. In markets where supply is greater than demand (buyers' market) sale price will be less than market value.

As Realtors, our role is to educate our clients on market value for properties. As buyer or seller representatives, we have access to the same information and can derive accurate market values for properties. Like any other product or service, superior features will obviously increase perceived value. The writer makes it seem as though a Realtor should be able to estimate selling price to the dollar, thereby eliminating any negotiation between buyer and seller.

The value of a home is different to every buyer. If location is imperative to one buyer, the perceived value of a home may be $20,000 more than to the buyer who sees the property as an investment. A pool sized backyard may mean more to someone than a double car garage would. Value cannot be preset, it is subjective. A properly priced home will draw more attention than a home that is overpriced. As a sellers' representative, my objective is to maximize my clients' return on their investment. The writer seems to be bitter about Realtors' acting in their sellers' best interest. Whether this is because he has constantly losing out in bidding wars or if he can't seem to get a proper return on his sales is not made clear. Proper representation will make sure a buyer's best interest is protected and they won't over-pay for a home, even in a sellers' market.

The market is always good. It is either good for sellers, or good for buyers. It is never good for both parties at the same time. There will be times where bidding wars are the norm, and times when a buyer calls the shots. Regardless of which type of market we are in, the price being paid for a home is always determined by the buyer. The right to back away during a multiple offer situation is always there and using a professional to educate you throughout the process is your best option.

The story ends with the writer taking a shot at Realtors by stating "..asking price itself should not be a gauge for what a home is worth. Real Estate agents have taken care of that.".

It is sad that a respected paper such as the Financial Post has to fill vacant front page space by inserting comments from uninformed sources. The Headline - Listing Prices Mean Nothing - had so much promise, yet the story fails to deliver accurate information.

The point that this article does drive home is that catchy headlines in the newspaper should not be a gauge for accurate information. Uninformed journalists have taken care of that.

Asif Khan, ABR
Re/Max Hall of Fame
Re/Max Chairman's Club
Re/Max All-Stars Realty Inc., Brokerage
905-888-6222