How REALTORS® Can Better Inform Clients About Real Estate List Prices

If you’re a Realtor who is representing homebuyers, Wahi offers a variety of tools to help you keep your clients informed and manage their expectations effectively.

By Josh Sherman | 4 minute read

A home is worth what someone will pay, not necessarily anywhere near what it’s listed at.

When a young Greater Toronto Area couple recently saw a spacious four-bedroom detached home in suburban Halton Hills listed for $999,999, they couldn’t wait to make an offer.

The stunning red-brick home was located in a desirable neighbourhood near a good school, had lots of upgrades including a new kitchen, and featured a finished basement. It was exactly what they were looking for. It was also around their budget, which they had learned didn’t go far enough for a detached home in the city of Toronto. Almost immediately, the couple told their REALTOR® to place a bid of $950,000 on the home, having heard that many homes were selling under-asking. They were excited to see how the seller would respond to what seemed like a good offer in a supposedly quiet market.

Their excitement soon turned to disappointment, though: in a massive bidding war, the listing ended up attracting more than 25 other offers. After just six days on the market, the house sold for $1,350,000—a whopping 30% over asking.

This scenario isn’t uncommon in real estate markets around the country. Certain price points will see more buyer competition than others, even when a market appears to be cooling overall. In what’s become a common strategy, some listing agents are opting to price homes well below their true market value. Realtors use this pricing tactic to try and attract more bids — and sometimes it works. For example, in a situation similar to the one in Halton Hills, a detached home in Ajax ultimately sold for $275,000 over asking. It had been unrealistically listed at $600,000 and attracted 60-plus offers in the process. What represents a below-market price may vary from market to market, but this tactic has been employed across Canada to varying degrees.

Fortunately, there are a few ways Realtors house hunters to avoid falling victim to lowball listings that aren’t actually within their budget. 

1. Suggest Trying Wahi’s Free Home Value Estimator 

Wahi’s Free Home Value Estimator can save homebuyer hopefuls a lot of disappointment. The tool, currently available across Ontario, is based on Wahi’s proprietary home value estimation algorithm. Estimates appear alongside each listing, and the tool drills down into a variety of property characteristics for all housing types for a realistic valuation (here are the top six factors that affect a home’s value).

According to Wahi’s estimator, the Halton Hills home that was listed for $999,999 but sold for $1.35 million had an estimated value of $1.26 million. While the tool isn’t perfect, in testing it’s proven to be the most accurate in Canada. It can quickly provide a reasonable estimate based on available listing information and should help manage expectations, although it provides too wide a range to use for actual bidding.

2. Recommend Clients Check Out Comparables 

Anyone with a Wahi account has access to a treasure trove of data, including previous sold prices in a growing number of provinces. Encourage your clients to take advantage of this data. If they’re looking for, say, a three-bedroom home in a particular neighbourhood, tell them to see for themselves what similar properties in the area have sold for recently. For condos, Wahi has launched a new feature on its website and app that shows all units for sale (and that have been sold) in a given building for easy on-the-fly comparisons.

Of course, every home is unique and certain factors — such as a major renovation boosting the price or structural issues resulting in a discount — can mean two apparently alike homes have very different prices. But browsing comparables can help clients ballpark the value before getting too attached to a listing.

3. Share the Listing History for the Property 

In each of Wahi’s listings, you can see not only what a property sold for but each time it was listed, terminated, or relisted. A comprehensive and transparent listing history gives homebuyers a better sense of seller motivations and strategies.

For example, in late January a four-bedroom semi-detached home in the North York neighbourhood of Humber Summit was listed for $1,149,000. Within three weeks, the listing was pulled from the market, only to reappear shortly after for $835,000. Wahi’s estimator pegs the home’s value at about $1 million, which is also what it last sold for in February 2021. Based on the listing activity, you could deduce that the seller still hopes to sell for over $1 million but is trying to attract more bids with a discounted sticker price.