It seems these days everyone’s got a quick and easy theory on how to price a home, but many are filled with errors that will either cause you to under-price your home, or over price it. Neither is good, because under pricing it means you’re just giving your equity away to the new buyer, and over pricing it means it will sit on the market longer and perhaps never sell. Statistics show that homes that are over-priced tend to sit longer and the seller ends up taking less because the market wonders what is wrong with it when it sat so long. Top Tips for Pricing Your Home in Today’s Market.
Here are some tips to consider:
- Don’t go by the property appraiser’s assesses value- I’ve talked to several property appraisers over the years including our own Ken Wilkinson. A property appraiser from IL told me it’s not the property appraiser’s job to value a home correctly, but rather simply it’s their job to value it fairly. There is a big difference. Because property appraisers use a mass appraisal system, they’re trying to price all homes fairly. Obviously if they could price each home at market value that would be wonderful, but they appraise hundreds of thousands at a time without going in the property, so it’s all done in relation to every other property. There can be a wide margin for errors with this system, and thus why there is an appeal process if you believe they’ve made an error. It’s amazing how well they do county-wide, and yet we can’t rely on any one valuation to be absolute. There are variations on many properties.
- Sites like Zillow provide Estimates. In fact, they call it a Zestimate, but it’s only that, and I’ve seen the valuations vary widely in just a matter of days. They use an online computer model, but again this model doesn’t visit the home, see inside, evaluate the condition, etc. They may look at all homes in a subdivision or street, but here in SW Florida there can be wide variations from street to street. Picture a riverfront home compared to a home 100 ft away across the street, or a golf course lot versus off golf course.
- Be Wary of Price Per Foot- I could show you two identical 2,000 sq ft homes from a builder. One is built with a pool, the other is not. One is on a waterfront lot, the other not. One upgrades the kitchen, adds a 3rd garage, upgrades carpet, cabinets, etc, and the second remains plain Jane. Obviously the pool and the lot location affect the price per square foot, so the square footage doesn’t really mean much. You could have a home built in 1952 sitting next door to a stupendous home built in 2012 with all the new hurricane protection, wiring, plumbing, roof, etc.
- Study the Appraisal- Appraisals can be ordered for different reasons. It could be ordered for resell, refinance, estate value, eminent domain, taxation, etc. The scope and purpose can affect the value. If the bank sees you’re a great credit risk, it’s possible a refi appraisal could come out higher than a resale appraisal.
- Be Careful Valuing Amenities- Just because you put an upgrade in the home 20 years ago doesn’t mean it has much value today. I recall back in the late 1980’s going to a seller’s home on Wren Rd in San Carlos Park. Back at that time homes were selling on that dirt road for $30’s. The seller added a $20,000 pool and expected over $50,000 for that home. It’s true, if you add value to pool cost you would think it would be worth that, but a $22k pool to a $30k home buyer is an extravagant amenity they cannot afford. That’s roughly 50% of the house value which was considered an over-improvement for the area at that time. It’s possible that pool had little to no value in that price range at the time. FHA wouldn’t even give value to a sprinkler system there as it was considered an over improvement.
It pays to value a home correctly the first time, as the market has a way of speaking in the end. The sooner you listen to the market, the better off you’ll be. It pays to work with a seasoned agent who can help you price your home using sound methods. On paper you might be able to make it come to what you want, but does that do you any good if a buyer won’t pay that, or a lender won’t lend that much. Be realistic. No matter the market, up, down, or sideways, you will always find those that over price and find a way not to sell. And even in the ugliest of markets’ homes do sell, because sellers price it at today’s value, not some number they need, nor a number from the past.
Remember, the market never cares what you need for your home. The market only cares if it’s priced correctly, and if it matches the buyer’s needs. Good luck, and happy home selling.