# Valuation too low



## markomark (Jun 17, 2017)

I'm selling my house myself with comfree. I've renovated the entire house, it has been a big job and it complete modern with high ceilings, it is outside of the GTA. Because i removed the ceiling for the high ceiling the square footage is low. Also another wall is added for the insulation so i lost another 100sq ft.. Because of this i think the agent assessed it lower than expected about 20% less. The thing is the house is beautiful but i think the agent doesn't value the high ceiling. I had one showing today and the people were blown away because all the houses are country style and mine is modern. I actually added 5% to the asking price comfree suggested. I am starting to think this agent is just 1) dumb 2) trying to get me to sell it cheap and fast so it looks good for his company.
There is another house down the street selling for 15% more than has more square footage but old style but has been for sale for 6 weeks and no offers. I think my area is better too. I guess i can hold out for higher offers?


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## AltaRed (Jun 8, 2009)

An RE agent is motivated for the sale to get the commission, so they will want to either 'lowball' or set at market, the listing price. How long has the house been listed? If it's been on the market a few weeks, I'd suggest the listing price is about correct....otherwise you would have had multiple showings so far and perhaps offers. A listing agent is supposed to show you 'comparable sales' so that you can make a judgement on the listing price (given upgrades, location, configuration). I always start circa 5% higher than comparable sales (not listings) in the immediate area and then willing to accept a bit less. The last 2 houses I sold in Calgary, one I sold for right on list and the other 1-2% below list. It is up to you whether you want to hold for an offer at list.

Be careful though about value beliefs. Homeowners often have an unrealistic view of what they think their house is worth due to emotional attachments, upgrades that may not boost resale, personalization, etc. Few have the ability to be objective about it. What is beauty in the eyes of the owner may be lipstick on a pig to someone else. Examples for an 'average' house: Deficiency on square footage, less than 2.5 baths (on the average house, meaning small to no ensuite and no 2 piece powder room), less than 3 (or 4) bedrooms, noisy street, backing on to commercial/retail, etc. If you truly are torn (disconnected) about its market value, get a formal appraisal done and let the appraiser know you are trying to set a fair market price.


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## OnlyMyOpinion (Sep 1, 2013)

As AltaRed notes, the realtor should offer up recent comparables, tell you what they think you should list for and what it will sell for, but ultimately it is your call. Some sellers are motivated for a quick sale, others are motivated by getting top dollar, etc.

IMO, in an active market you should get a bunch of showings in the first week after listing, if no offers come from that you are probably asking too much. You should at least get a low ball or two that allow some negotiating to occur.

If you know your plans ahead of time, spend the previous few months tracking comparables off of realtor.ca. That way you know the list and the approx time they stay on the market (you won't know final sale price but your realtor will).

We sold one this month, realtor suggested a listing price that was exactly what I had in mind. They thought we might have to settle for 2% below list. There were ~10 showings over the first ~3 days. We got a low ball (-4%) the same day it was listed. That allowed us to indicate to other brokers that we had an offer if their clients were serious. That provided another offer the day after listing that was 2.2% above list and was accepted, as well as a third 'backup offer' in the event that the one on the table didn't close.


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## Just a Guy (Mar 27, 2012)

Make sure the realtor shows you all comparables, not just a selection of them (to support a lower price). 

I own a lot of properties, the assessed values I prepare depend on who I'm talking to. For example when I'm talking to a bank to get a loan, I'm looking for the highest assessment I can get, so I pick certain comparables. When I appealed the taxes with the city, I pick the lowest comparables. The difference between those two, on actual properties I own, can be upwards of 100% of the value (I've got a property that was assessed at both $70k and $140k). 

The only way you ever know the real value of a property is when someone cuts you a cheque, until then it's only a guess. You never know what some fool is willing to pay either, and you only need to find one fool.


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## markomark (Jun 17, 2017)

I had the first real showing today. They really liked it spent a lot of time, asked question about roof and electical etc. Looks like they are ready for an offer. Like i suspected i am selling too low. What should i do? Maybe tell them i am only accepting offers in 1-2 weeks time? Just get the offer then let it expire, don't say anything, play hard to get?


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## OnlyMyOpinion (Sep 1, 2013)

It bit late now. If they meet list and have no conditions attached then it is sold. Financing and inspection are common conditions. 
Countering above list or delaying hoping for a higher offer would be unscupulous IMO.


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## markomark (Jun 17, 2017)

Are you serious, you are telling me i can't just let the offer expire? What about the agents commission, can i just tell her no commission even though i agreed in the listing to offer up to 2.5?


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## Dmoney (Apr 28, 2011)

They can't force you to sell unless you have already signed back the offer.


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## Mukhang pera (Feb 26, 2016)

markomark said:


> Are you serious, you are telling me i can't just let the offer expire? What about the agents commission, can i just tell her no commission even though i agreed in the listing to offer up to 2.5?


I would say you can let the offer expire, unaccepted. But, as you seem to recognize, you might well be open to the realtor's claim to a commission. Usually the listing agreement signed by a vendor obligates the vendor to pay a commission on the agent bringing forth an offer at the asking price. However, if the offer is subject to unusual terms, such as requiring you to carry paper on the deal, then the entitlement to a commission will not arise if you do not accept.

Scruples aside, if you see it as likely that the prospective purchasers are going to present an offer at full price or better, but less than what you really want as a sale price, better to recruit the agent to the cause and agree to cancel the listing before any offer comes in. Then you can enter a new listing at a new price.


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## AltaRed (Jun 8, 2009)

Comfree might have a different contract form. From Wiki


> The ComFree network offers different flat-fee service packages to help homeowners sell their homes. Basic packages include exposure on ComFree.com, lawn signs, and a personalized consultation with a sales rep (depending on location). The more premium packages offer additional advertising support. Depending on location, a competitive market analysis may also be available.[9] In Alberta and Ontario, the ComFree Commonsense Network brokerages enable homeowners to list their homes on REALTOR.ca through a board’s MLS system, and allow them to access owner-directed services such as advice on appraisals, and legal and administrative aspects of the home sale in addition to marketing support.[4]
> 
> In Saskatchewan, ComFree provides flat-fee services via a “for-sale-by-owner” model[9] to homeowners who want to sell without a real estate agent.[10] In Alberta and Ontario, the services to homeowners are provided by ComFree Commonsense Network brokerage, a brokerage duly registered in each of those two provinces under the applicable real estate/brokerage act.[4] In Manitoba, the services to homeowners are provided by ComFree Commonsense Network broker, a brokerage duly registered in this province under the applicable real estate/brokerage act.[11]


We don't know what package of services the OP purchased. The OP should know the Ts&Cs of what he has signed, especially when it comes to a full price offer without conditions.


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## markomark (Jun 17, 2017)

How about these bidding wars with offers over asking? Seems to go against what mukhang is saying. I had no idea i might be obligated to sell or pay a commission. The commission is up to 2.5% so i could could offer nothing?


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## Mukhang pera (Feb 26, 2016)

markomark said:


> How about these bidding wars with offers over asking? Seems to go against what mukhang is saying. I had no idea i might be obligated to sell or pay a commission. The commission is up to 2.5% so i could could offer nothing?


Bidding wars are often the product of a carefully-orchestrated event between the vendor and the vendor's agent. I know one Vancouver realtor who counsels vendors in the art of creating a bidding war. Typically, the property will be listed a bit below what is seen to be the market, thus attracting interest. The agent will hold open houses on Saturday and Sunday, telling interested parties that offers will be taken on the following Monday or Tuesday. That gives potential offerors time to consider financing and other considerations, increasing the prospect of receiving subject-free offers. In general, in the bidding war scenarios, the agent sees little chance that no sale will occur and no commission will be earned.

You can be sure that in a slow market, with the property priced at or slightly above market, an agent is not going to stand by, saying nothing, while the vendor rejects full-price offers.

Most important to the agent's right to a commission is what was agreed in the listing agreement. It should set out clearly what conditions must be met for the agent to be entitled to a commission. You might have a listing agreement that says you are within your rights to be whimsical, mercurial and are only liable to pay a commission if and when you bloody well feel like it.


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## sags (May 15, 2010)

Bidding war days are over. Buyers are trying to get out of signed contracts now. Lawsuits are keeping lawyers busy.


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## markomark (Jun 17, 2017)

The issue is that this is a custom home, i took out part of the ceiling on the 2nd floor which makes the actually sq foot low hence the low valuation. I think that if someone likes this architectural feature they need to pay for it as if it was usable sq. footage; it shouldn't be like a defect. Besides, for a couple the space is perfect. So that is my problem is that i am cutting my nose for the many unique features that someone should be paying more for not less. That's why i think there might be a bidding war because when you have something that nobody else does people pay more. It is not my fault valuations are based on sq footage not cubic square feet.


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## Mukhang pera (Feb 26, 2016)

sags said:


> Bidding war days are over. Buyers are trying to get out of signed contracts now. Lawsuits are keeping lawyers busy.


I no longer live in Vancouver or Toronto, but I suspect you are right. As I was suggesting to marko, a vendor's agent might be willing to let a full price offer go by and not claim a commission when other offers at least that good, and soon to be at hand, are a virtual certainty. But when the wind starts to shift and there's a risk of avarice resulting in no sale, I would not expect my agent to be assuming an "easy come, easy go" attitude and waive commission entitlement.

Also, as you say, a felicitous time to be a real estate barrister. The real estate bar can eat quite well off both rising and declining markets. I recall in Vancouver in the early 80s, vendors signing sale contracts to close 90 or 120 days later. By that time the market value would have gone gone up 20%, so the bar was kept busy with specific performance and/or damages lawsuits brought by purchasers against vendors who were less thrilled to be conveying at what had become a fire sale price. Then, a couple of years later, with a 22.75% prime, real estate prices were going down as fast as they went up, so that come closing day 90 or 120 days out, it was hardly surprising that purchasers were just a tad reluctant to have to complete a purchase, knowing that they were now paying 20% too much in a still-declining market. So by that time, it was the vendors who were the ones commencing the lawsuits, seeking to force recalcitrant purchasers to stick to their improvident bargains. All good clean fun for the lawyers. Reminiscent of the bank advertising way back (B of M perhaps?) with the slogan "When you succeed, we succeed." What was unspoken was the corollary "When you go belly up, we still succeed."


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## AltaRed (Jun 8, 2009)

markomark said:


> The issue is that this is a custom home, i took out part of the ceiling on the 2nd floor which makes the actually sq foot low hence the low valuation. I think that if someone likes this architectural feature they need to pay for it as if it was usable sq. footage; it shouldn't be like a defect. Besides, for a couple the space is perfect. So that is my problem is that i am cutting my nose for the many unique features that someone should be paying more for not less. That's why i think there might be a bidding war because when you have something that nobody else does people pay more. It is not my fault valuations are based on sq footage not cubic square feet.


Maybe. What is one person's view of a jewel is another person's view of NFW. The more unique a house, the smaller is the target market and you may have dimished your pool from 100 potential buyers to 1 potential buyer (exaggerating to make a point). I've bought and sold many houses over the years. Mainstream (boring?) configurations and building style have a larger target audience, and uniqueness may not be at all recoverable in a sale. Things like paint, kitchan and bathroom renos have the most return on resale. Most other things not so much (or even detract from a sale).

Added: Some people will really like 9 ft ceilings while others prefer square footage. It is simply that simple.


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## Just a Guy (Mar 27, 2012)

I was talking with my realtor, he told me that often the first offer is the best offer. While you can sometimes hold off for something better, many times the offers come in lower later on. His thinking behind that is, first you piss off the original buyer, so they won't offer again and next, as it's been sitting on the market a long time, the buyers want more of a deal.

Since I don't tend to sell properties often, I really don't know, but I know if I make an offer at list and it gets rejected, I'd be pissed.


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## Mukhang pera (Feb 26, 2016)

Just a Guy said:


> I was talking with my realtor, he told me that often the first offer is the best offer.


I think that to be a bit of lore taught at Real Estate University since time out of mind.

The first house I ever sold was a triplex in Kitsilano, in Vancouver. The agent came and walked through it and said he'd he happy to list a little over $100,000, maybe as high as $105,000. Then he said "or we could list at $99,000 and stick pretty close to it." So, I opted for that route and signed the exclusive listing. Five days later, he comes in with an offer at $95,000. I asked, what about sticking to $99,000? He came back with the classic "first offer is often the best offer". Well, in my early 20s I was pretty green and suggestible, so I took it. The agent made a quick $4,750 without ever getting around to placing a first ad in the West Side Real Estate Weekly. At least I made the right move in not agreeing to the full meal deal with an MLS listing, which would have set me back 7% commission on the first 100k instead of 5%, for a total of $6,650 on a sale of $95,000. I was a university student back then and $6,650 represented a good chunk of my annual budget.


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## Dmoney (Apr 28, 2011)

My house in Toronto is currently listed.
Unfortunately I was a little slow getting to market, and listed right in the middle of Kathleen Wynne's re-election campaign (aka 16 new housing measures to buy votes).
Got a handful of offers on offer night, ranging from 6% above ask to 25% above ask. In the weeks prior, houses were going for 50-60% above ask - it was madness and I was hoping to capitalize. I've got time on my side, so decided to wait it out.
Unless you have signed a contract saying otherwise, there is nothing that forces you to sell just because an offer comes in at your asking price.

Since the original offer night, I've had a number of offers, each progressively higher than the initial highest bid on offer night.

I definitely missed the big rush, but there is still demand out there, and the market is looking for equilibrium at the moment


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## AltaRed (Jun 8, 2009)

Just a Guy said:


> I was talking with my realtor, he told me that often the first offer is the best offer. While you can sometimes hold off for something better, many times the offers come in lower later on. His thinking behind that is, first you piss off the original buyer, so they won't offer again and next, as it's been sitting on the market a long time, the buyers want more of a deal.
> 
> Since I don't tend to sell properties often, I really don't know, but I know if I make an offer at list and it gets rejected, I'd be pissed.


 I have sold a number of houses over the course of my career (corporate transfers and all that). I would not go so far as to say the first offer is likely the best offer, especially if not at list. I've had offers below list and countered back to list, or $1000 below list. I've sold a few that way. But it is good to not let the listing go stale.

What can happen is that after the first few weeks, realtors (and potential buyers) start thinking the homeowner is more willing to negotiate downwards from list and the offers, if any, start to decrease (but not always). Sometimes it just takes the right buyer. But a listing that gets to be 30-60 days old is almost 'dead in the water'. Potential buyers and realtors start to think there is either something wrong with the property or the homeowner is in denial about what the property is really worth.... at least that is the case in bigger urban centres. Less of an issue I think in smaller places where there is not much turnover, listings or potential buyers. Sometimes it will be best to take a 'stale' listing off the market if the homeowner can do so, and re-list several months later. BUT overall, my experience is the best opportunity for the best prices are within the first 2-3 weeks of listing.

Added: Except maybe in really stupid markets like TO and Vancouver.


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## OnlyMyOpinion (Sep 1, 2013)

Dmoney said:


> ... Unless you have signed a contract saying otherwise, there is nothing that forces you to sell just because an offer comes in at your asking price...


Agreed. What I had in mind upthread was the instance where you have begun negotiations by countering to an initial offer. I believe if the buyer accepts your counter offer with no conditions, you are bound to accept.
If you ignore an initial offer, even if it is at list without conditions you are merely flakey. If you are working with a realtor (it appears that the OP is not), they may have some recourse.
This is OMO, I am far from an expert.


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## OhGreatGuru (May 24, 2009)

Real estate is only "worth" what people are willing to pay for it. RE agent no doubt valued your house based on the reduced square footage. To you, this reduction was worth it for the aesthetics. To most potential buyers it is wasted or lost space. (The current popular trend for "grand" 2-story halls is a waste of what could be usable 2nd floor space to more practical people.). You made alterations which pleased you, but which may not have been a wise investment decision from the point of resale value. Unless you are lucky enough to find a buyer who has the same tastes as you, live with it.


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## mark0f0 (Oct 1, 2016)

Things have changed a lot in the past few months. And a house merely being offer for 15% more down the street doesn't mean anything. Only recent transactions between arms-length transactants do.


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## Emjay85 (Nov 9, 2014)

markomark said:


> The issue is that this is a custom home, i took out part of the ceiling on the 2nd floor which makes the actually sq foot low hence the low valuation. I think that if someone likes this architectural feature they need to pay for it as if it was usable sq. footage; it shouldn't be like a defect. Besides, for a couple the space is perfect. So that is my problem is that i am cutting my nose for the many unique features that someone should be paying more for not less. That's why i think there might be a bidding war because when you have something that nobody else does people pay more. It is not my fault valuations are based on sq footage not cubic square feet.


On the contrary, you have probably built something that a small portion of the market will be interested in, especially if its more suited for just a couple. You need to appeal to the masses when doing renovations if it is for resale purposes. If it is in your home and you're going to enjoy it for years and years that's a different story. 

You have probably narrowed your target market making it a tougher sale.

I am by no means sticking up for realtors as I don't think highly of some of their business practices but, they aren't always full of bs. 

As it was said prior, a big downfall to sellers selling comfree is being completely biased to their own house and demanding it gets more more more when it isn't always the case.


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## markomark (Jun 17, 2017)

It's a 1-1/2 story bungalow so i would think a couple is the main buyer for such a size of home. It so modern like what you would see in a magazine, people spend a lot of money to build custom homes with high ceiling, finished beams, sky lights etc. why shouldn't i get top dollar for it? I surly shouldn't lose money because of it, that's crazy. There is plenty of space for a couple. It shows like a new home.

Already the neigh offer a low ball and the first showing they are sending a offer today. Tells me it is too low and it is very appealing to people in a sea of country style houses. This house can attract people who won't normally want to live in this town. It is not in the GTA but close so i think it is still increasing even if it is declining in the GTA, the housing prices are a fraction.

Funny about accepting the first offer the guy down the street was just telling me to never accept the first offer:eek2:

Needless to say i am thoroughly confused because i think i am losing 10-20k with my low asking price.


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## AltaRed (Jun 8, 2009)

markomark said:


> Needless to say i am thoroughly confused because i think i am losing 10-20k with my low asking price.


I don't see a need to be confused. How long has the listing been active? You won't know what the market is until you get your first offer. Subject to the terms of your listing agreement, you can always say no. In a good market with a market priced house, it would not be unusual to get an offer in the first week. If it was 5% or so underpriced, it would likely have had an offer in the first few days.

One other point to consider. Unless it is an overheated market, you should also be aware that 'for sale by vendor' which is essentially what comfree is, a cross section of potential buyers could stay away. I always used to avoid 'for sale by vendor' properties as a matter of principle when I was house shopping. My belief was that the vendor was looking to squeeze every last penny out of the property. Not that I fault anyone from doing that, but I had no desire to negotiate under those conditions when there were alternative properties to consider.


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## Emjay85 (Nov 9, 2014)

markomark said:


> It's a 1-1/2 story bungalow so i would think a couple is the main buyer for such a size of home. It so modern like what you would see in a magazine, people spend a lot of money to build custom homes with high ceiling, finished beams, sky lights etc. why shouldn't i get top dollar for it? I surly shouldn't lose money because of it, that's crazy. There is plenty of space for a couple. It shows like a new home.
> 
> Already the neigh offer a low ball and the first showing they are sending a offer today. Tells me it is too low and it is very appealing to people in a sea of country style houses. This house can attract people who won't normally want to live in this town. It is not in the GTA but close so i think it is still increasing even if it is declining in the GTA, the housing prices are a fraction.
> 
> ...


I don't think it is abnormal, or a sign that you are priced too low, because you are getting offers after people walk through once, especially in this market.

That being said, if you priced it 10-20k higher it might not have received those offers or showings to begin with. You might be at market value. The market being what people are willing to pay for that particular house in that particular area. 

Don't get greedy thinking you could get more, that has no end. If you listed for your 10k-20k more and still had whatever action you are speaking of, does it mean it should have been even more than that?

The market for your house will dictate what kind of price it will fetch. It just may take more time.


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## banjopete (Feb 4, 2014)

markomark said:


> why shouldn't i get top dollar for it? I surly shouldn't lose money because of it, that's crazy.


If possible to remove yourself from the scenario imagine reading this in someone else's story. As others have noted, market value is market value despite your beliefs. No one is entitled to profit from renovations, and certainly not guaranteed to. The market is not what it was a month ago, or a year ago, and renovations don't mean squat unless the right person comes in. Many want to do their own renos, and prefer that, just like paint colours and furnishings. Best of luck with the sale, but I'd be appreciative of the offers that are coming in and be happy you're getting traffic and interest. You might never see a better price, the media isn't helping with stories of broken contracts and rates going up while prices fall month over month in the area.


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