When you go to Florida, or anywhere hot for that matter, do you wear a down-filled parka? I didn’t think so. Real estate is like that, too. Let me explain.

A couple of weeks ago another Realtor told me about clients of hers who were moving to Toronto from out of town. They had sold their out of town home and were looking for a home in Toronto. Shortly after listing their home, they received 3 offers. Each offer was for less than their list price and conditional on financing and inspection. That type of offer wasn’t unusual for their area, even in a multiple offer situation.

When they found a home they liked in Toronto, they decided to make an offer. Their Realtor wasn’t surprised to find out that there was more than one offer on the property, but she WAS surprised when her clients instructed her to prepare an offer for less than list price and with financing and inspection conditions. They assumed that offers in Toronto would be the same as they were in their hometown. Bad assumption. Although their Realtor advised them they had little to no chance of being successful with that type of offer in Toronto, they decided to forge ahead with their offer, confident of their chances. They may as well have been wearing down-filled parkas in Florida. Their offer wasn’t accepted.

The lesson here is a simple one – know your market and know it well. And when I say “know your market”, I’m not referring to the Toronto market because there’s no such thing as the Toronto market. The Toronto market is made up of hundreds, if not thousands, of micro-markets. How so? Well, consider these examples:

• If you have a 3 bedroom semi-detached home to sell in the John Wanless neighbourhood that’s properly priced, there’s a good chance you’ll get plenty of showings, receive multiple offers and sell it very quickly for more than your list price. But if you live in a large, custom home in the Cricket Club neighbourhood which is just a few blocks away, and hope to sell it for close to $4,000,000, chances are you won’t get a lot of showings, won’t get multiple offers, won’t sell it quickly and will sell it for less than your list price. Both of these homes are in Toronto and are within walking distance of each other, but their markets are vastly different.
• The same holds true for condos – there can even be different markets within the same building! Let’s say most of the units in your building are 1 and 2 bedroom units with average finishes that are similar to the 1 and 2 bedroom units in many surrounding buildings. This type of unit will probably take some time to sell and will probably sell for less than list price. But if you live in one of the rare 3 bedroom units located on the top 2 floors of your building only, with a large balcony and a glorious view of the skyline, your unit might sell very quickly and for a very good price.

Why is it so important to know your market? Because your strategy and actions depend on it. Here are a few of the many reasons why this is so:

• If you’re selling, what type of list price should you choose? Should you choose a slightly high list price because buyers in your market expect you to negotiate the price or a lower list price because buyers will be ready to bid the price up?
• If you’re buying, should you make a low ball offer because sellers in your market tend to choose inflated list prices or should you offer close to list price because sellers tend to price realistically?
• When it comes time to decide whether to buy or sell first, you’ll need to know what the markets are like for both the homes you’ll be selling and buying. Keep in mind that you may be dealing with two entirely different markets. If it’ll be hard to buy but easy to sell, you may prefer to buy first. On the other hand, if it’ll be hard to sell and easy to buy, selling first might be the better option.
• Will buyers expect you to have a pre-inspection done and worry that you’re concealing problems with your home if you don’t?
• Will buyers expect your home to be staged and look perfect?
• Will sellers be willing to accept an offer conditional on you selling your current home?
• What type of conditions are acceptable to a seller in your market?

The list goes on and on, but I think you get the idea: expertise in your specific market will go a long way towards helping you achieve the best result possible. If you know your market inside and out, great! You’re all set. But if you don’t, try to Find Yourself the Best Realtor. You’ll be glad you did.

As always, if you know of anyone who’s looking for an honest realtor who really knows his stuff and doesn’t pressure his clients, Please Don’t Keep Me a Secret. I really appreciate your referrals. Thanks for reading and don’t be shy if you have any questions or comments!