Pricing a Hamilton Semi Over the Seller’s Target
Seller Marta inherited a 1,100-square-foot, three-bedroom semi in Hamilton’s Crown Point neighbourhood and wants to list at $899,000. The salesperson’s CMA uses four recent sales of similar semis: 1,120 sq ft sold for $815,000 and needs an $8,000 upward adjustment for a finished basement; 1,050 sq ft sold for $790,000 and needs a $22,000 upward adjustment for size; 1,180 sq ft sold for $842,000 and needs a $12,000 downward adjustment for superior condition; 1,090 sq ft sold for $805,000 and needs a $14,000 upward adjustment for lot size. There are 12 active semis, 4.6 months of inventory, and average days on market of 38. The roof needs replacement at about $15,000, and the kitchen is dated. Marta says, “I need $880,000 net after commission and moving.” The salesperson charges 5% plus HST.
1. Reconcile the four comparables into a supported value range and recommend a list price.
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Adjust each sale to the subject: $815,000 + $8,000 = $823,000; $790,000 + $22,000 = $812,000; $842,000 − $12,000 = $830,000; $805,000 + $14,000 = $819,000. The adjusted range is $812,000–$830,000, with a mean and median of about $821,000. That is the value support before the roof and kitchen issues. If the roof is left deferred, a further roughly $15,000 deduction is defensible, moving support to about $797,000–$815,000. If Marta replaces the roof before listing, the support returns to the $812,000–$830,000 band. With 4.6 months of inventory-balanced market-and 38 average days on market, there is no evidence for a 9.5% premium over the adjusted cluster. A defensible list price is about $819,900–$829,900, with an expected sale near $815,000–$825,000, not $899,000.
2. Marta insists on $899,000. What should the salesperson do?
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The salesperson should not simply refuse, but should not present $899,000 as market-supported. The client decides the list price, so the salesperson can enter the listing at the seller’s instructed price if it is lawful, but must document the advice in writing: the adjusted comparables, the 4.6-month inventory, the 38-day average DOM, and the risk that a price 9.5% above the cluster will produce few showings, stale days on market, and a later reduction that buyers may treat as a distress signal. The salesperson should also flag appraisal risk if the buyer needs mortgage financing. A practical plan is to list at a supported price, review showing activity after 14 days, and pre-agree on a reduction trigger. If Marta insists on $899,000, the salesperson should confirm the instruction in writing, avoid any misleading “priced to sell” advertising, and consider whether the overpricing makes the representation untenable.
3. Using the 5% plus HST commission and allowing $3,000 for moving, what sale price would Marta need to net $880,000 before mortgage discharge and legal fees?
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At $899,000, the 5% commission is $44,950; HST at 13% is $5,843.50, so commission with HST is $50,793.50. After $3,000 moving, the seller would receive about $845,206.50 before legal fees and mortgage discharge. That is about $34,793.50 short of the $880,000 target. To net $880,000 after commission/HST and moving but before legal fees and discharge, solve P − 0.0565P − $3,000 = $880,000, so P = $883,000 ÷ 0.9435 ≈ $935,900. That price is far above the adjusted comparable range and would need a correspondingly higher buyer appraisal or a material improvement in the property. Marta’s net target is therefore unrealistic at $899,000; she must reduce the net expectation, reduce selling costs, or add value through the roof/kitchen before listing.