8/10/2015

Don't Overprice Your Home's Asking Price

When a willing buyer and a willing seller complete a home sale, they have just announced to the world what the value of that property is.  That home may now be used as a marker for other similar home sales, based on other factors:

Location - proximity to community attributes such as parks, schools, and job market usually has more desirability to the buyer.
Size - Larger homes and larger lots may sell for more, and comparing a home to one that is much larger or much smaller could lead to the wrong pricing.  A buyer's lender may have very specific criteria on size when it comes time for the appraisal.
Bedrooms and bathrooms - The most common request from buyers today is for a three-bedroom, two-bath home; families today want and expect more privacy than in prior eras. And, the difference between a two-bedroom vs. a three-bedroom home may be critical for the buyer.
Features - Luxury sells, and homes with newer flooring, newer counters and cabinets are perceived as more luxurious and appealing. Some features such as spas and pools may not be worth extra to the buyer, these are often market-led factors. Newer landscaping may be a comparison item depending on the area.
Condition - A newer home that is well-maintained retains more of its original value, as do updated older homes. Homes with deferred maintenance sell for less.
Appeal - A home that looks inviting on both the exterior and the interior may be able to compensate somewhat for a less desirable location, or some other condition the seller has no control over.

If your house looks like this . . .
Too often sellers based an asking price on their own perceived value, or because they are comparing their property to a recent sale that is not completely comparable to theirs. Understanding how the buyer views the property, using the proper sale comparables most likely to be used by an appraiser, and seeing how their property stacks up against the immediate competition in the local market are important tools for seller objectivity.

It cannot be compared to this.
The public online valuation systems may be very accessible and offer quick valuations, but the homeowner should keep in mind that these systems do not use software that can "see" the home the way the buyer or your REALTOR does.  They use the public tax records, and may include properties inappropriate for yours.  As an example, 9 recently sold SFRs or condo properties in the Long Beach 90803 zip code between February 25th and August 4th, 2015 varied as much as 68% between the actual sales price and the online value estimate by a popular website company.  (Many real estate data sources within the industry do use AVMs, but some are "closer" to value than others.)  In this particular instance with the 9 properties, 6 of the properties were overestimated in value, and 3 were underestimated.  Two of the underestimated were within 1.8% of the actual selling price, which is a realistic market difference, while the third underestimated value was 17% less, which is far outside of the average  list-to-sell price.  The condo that was overestimated in value by 68% at $572,000 actually sold at $339,000.  Other estimates ranged between 7% to 41% over selling price. 

Speaking of estimates, the value of an experienced real estate professional cannot be underestimated. A good market opinion and strategy can earn you more money at the close, and save unnecessary time on the market.  Please contact me, a professional with 20 years' of experience! 







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