What to avoid when pricing your home
People often make a critical mistake when deciding on a price for their home. Rather than answering the question What is my house is worth?, they answer What is my house worth to me?. The difference between those questions is more than two words. Focusing on the correct, objective factors to determine the value of your house will yield a price that's in line with what the market will bear - and usually results in a quicker sale.
So what doesn't matter when you price a home?
What you paid
Unless you bought your home a month ago, your sales price has no bearing on what a buyer should pay. The real estate market changes constantly.
How much you spent on repairs
You just paid $2,000 to fix the plumbing? Good for you. Buyers will no doubt appreciate that there is now hot water in the master bathroom. That doesn't mean, however, that you can add the cost of your repairs to your asking price. Running hot and cold water in a home is generally considered a given, not an enhancement that increases the price.
What a home just like yours sold for ... in a different location
The same builder who constructed your house may have built 300 identical ones across the state. However, unless the other 299 are on your block, their sales prices do not affect the price of your house.
What a home just like yours in your neighborhood sold for 18 months ago
Again, real estate markets change constantly. It's useful to know the sales price of that house, but take it in the context of what's going on today. Maybe your area was a seller's market then, and that price was the result of a bidding war. If your area now is a buyer's market, you likely won't approach that price.
How much you need to purchase your next home
Whether you're flush with cash or broke, your home is worth the same. Your financial situation isn't relevant to a buyer.
Your 25 years of memories in the house
Those memories are priceless to you and worthless to everyone else.
What the Web says your home is worth
Web sites that estimate your property's value offer a good starting point when you're trying to decide on an asking price. Most home-valuation Web sites will tell you the same thing themselves - that their information is just a starting point and no substitute for specific market knowledge in the area.
So, what does matter when pricing your home? Among other things, the condition of your home, any recent upgrades, and the prices of comparable properties selling in the area all affect what you can ask for your property.
The best way to determine what to ask for your house is to do some homework, get as much information as you can, and sit down with a Realtor to help you arrive at an accurate valuation.
Whether you're interested in buying your first home, your next home, or just want to know more about homeownership in general, I encourage you to check out a couple of great online resources: http://www.texasrealestate.com/ or http://www.har.com/ and for all of your Pearland TX and Northern Brazoria and Galveston County real estate needs, please visit my site at http://www.danfrankrealty.com. All of these sites offer tons of useful, real estate-related information geared specifically for Texans.
Danny Frank is a local Pearland TX Real Estate expert.
This column was published in the 20July08 edition of the Galveston County Daily News
Good post and all important things to cosider in this current market.
Great post. Regarding reairs...and maintinence. I often ask a seller what would your home be worth if you did not replace the leaking roof, or change the hot water heater?
Good post. I hope sellers read it . It is important to be realistic if they are serious about selling.
Excellent post. I'm saving it for sellers to read. Thanks.
Hi Danny, So true !
Your estimate minus the actual market comps minus the wonderful memories minus the slightly weathered condition minus the births of your kids minus... You get the picture !
Super post, Danny! I am going to print it out and keep it with my listing materials. Thank you!
Danny, this was a great post. Thanks for keeping sellers realistic on pricing and on task!
Betina
Oh the accuracy of those words, now conveying them to sellers is the challenge! Some will listen, others...Oh brother!
Thank you all for the praise and comments...
Danny, There is a lot of good information in this blog. Thank you for posting and sharing it. I always feel the house is worth what the market will bare, and to be priced close to what others have SOLD for.