Even though prices have dropped over the past five to six years, we sometimes encounter homeowners who are in denial about their home value. Obviously if you are selling your home, you want to get as much as possible, but pricing it at the highest price doesn’t necessarily accomplish that goal.
Recently I spoke with a woman who said she understood that prices had declined since she bought her home in 2008, but she thought her home was worth more than what she paid for it. Unfortunately, since she hasn’t made any major improvements to the home and the location hasn’t changed, that’s just not true.
When you’re deciding on a price for your home, you need to put yourself into the buyer’s shoes and consider things from a buyer’s perspective. They’re listening to the media tell them that prices are great and it’s a buyer’s market.
In reality, in Long Beach right now, it’s a balanced market. Prices are far lower than they were at the peak of the market, but inventory has declined and demand is picking up. So there are buyers out there — but they’re looking for deals!
When you choose a list price, it doesn’t necessarily need to be the lowest price in the neighborhood, but it needs to be a great value, one that will entice and motivate buyers to make an offer.
You’ll want to compare your home to the competition in your neighborhood — and in other similar, close-by neighborhoods. You’ll want to consider price trends and look at what similar homes have recently sold for. How did they compare to yours in condition and location? How quickly did they sell?
When you are hiring a Realtor, listen to their pricing advice but be wary of agents who try to “buy” your listing by suggesting a price that’s beyond what the market will bear. An agent who believes in a win-win relationship won’t do this. If your home is overpriced, it’s a “lose” situation for you but the agent still “wins.” The agent will still get sign calls and internet leads on your homeif it is priced too high. But when the buyers decide your home is priced too high, the agent will simply sell them someone else’s home.
If you price your home too high and take months to reduce the price little by little, you can end up selling it for far less than you would have if you’d simply priced it correctly initially.
When I meet with homeowners, I remind them never to select a price based on what they want, what they need to net, or what their neighbor said it’s worth. The value is simply what a buyer is willing to pay.
If you don’t like what the value is, there are some factors you can influence and some you have no control over. You can make sure the home is clean, well maintained, nicely staged and easy to show. You can’t change the location, buyer expectations, the market or what other owners are asking for their homes – the competition.
If your home needs a lot of work compared to the competition, you’ll either need to change the home – your product – or you’ll need to discount your price accordingly. Things that may not seem like a big deal to the homeowner — flaking paint, floors that need to be refinished or neglected landscaping – may be magnified in the minds of potential buyers. What might cost you $3000 or $4000 to fix may send a message to the buyer that the home needs a lot of work and they may expect a discount of $20000 or even more.
If you’re interested in finding out what your home is worth in today’s real estate market — or what you can do to maximize the price when you are ready to sell it — please feel free to email us at [email protected] or call 562-896-2456.