The value of your home is determined by what able buyers are willing to pay for your home and what the appraiser will appraise it for. It is not determined by what your neighbor down the street is asking for their home. Today we’ll explore the dangers of pricing homes compared to neighbors listing.
Often, we go out on listing appointments and we give our opinion of value after studying the property and the comparable sales. It’s not unusual for a seller to say “But the home down the street is listed at X and my home is much nicer.” Then we hear the list of upgrades, and the routine maintenance items the seller has made, like trimming the bushes last week, new light bulbs, new AC in 2005, and new roof 10 years ago.
All these details are important for the MLS sheet, and some are important as selling features, so don’t forget to bring anything up you feel might be important. Just don’t expect extra value for routine maintenance on your home and even some upgrades don’t provide value. It may make the home stand out against another.
Some upgrades do add value. Most upgrades don’t add 100% of the cost though. I blame TV shows for painting the picture of putting $50,000 in upgrades into a home and expecting an increase of $200,000 in value. This isn’t how it works, unless you somehow bought the property for way under value.
We’re watching a few neighborhoods right now where sellers are pricing compared to their neighbors. There are no sales in the last 4 months and yet there are 5 new listings within 4 months and 1 older than 4 months. None have gone pending either. We see price reductions, but they are all still significantly over priced. A few came on the market in the last 2 weeks and they are overpriced as well.
Each seller is convinced that previous sellers have set the market. The reality is the first few sellers are like lost beacons in space, and each new seller follows their light. The problem is they’re going in the wrong direction and their buyers are in another galaxy.
As soon as a seller puts their home on the market at the correct price, it will sell, if marketed correctly. All their neighbors will tell them they priced it too cheap, because they all want a higher price. This is human nature; however, it doesn’t help anybody. Just because everyone is overpriced, and no homes are selling in your neighborhood doesn’t mean a buyer will come along and overpay.
After a while, buyers begin to ask what’s wrong with the neighborhood. All these homes are on the market and there are no sales. We’ve got a decent market here in Southwest Florida. If a home is priced correctly, there is a market.
Unlike towns where a plant closing affects the market, we have buyers. The market has changed from last year. Buyers are ready, willing, and able, but they’re cautious. They don’t want to overpay. This is a sign that our market is fully recovered, as much as it’s going to, and that prices have leveled out. Now market forces take over, like interest rates, incomes, consumer confidence, etc.
We are not in jeopardy of crashing like back in 2006. We will not see rapid price gains either. SW Florida has a balanced market dependent on market forces, and that’s an awesome thing.
When you’re putting your home on the market, you must ask yourself. Am I pricing my home at today’s value, or pricing it compared to what my neighbor down the street is asking? We’d better go find some actual sales and base it off those who have won the home selling game versus those who want a certain number, or think their home is worth a certain number because that’s what their neighbor is asking.
If you’re thinking of selling your home, call Sande or Brett Ellis 239-489-4042 Ext 4. We’ll give you the straight scoop. We’ll get you Top Dollar, and we’ll get it Sold. You’ll be moving on while your neighbors wonder if their house will ever sell. You can visit our website www.LeeCountyOnline.com to see all the homes in MLS. Call Brett and Sande and start packing!
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