There are some fundamental truths when it comes to pricing your property for sale. I should say that I am guilty of disregarding some of these when selling my personal properties, so I empathize, but the reality these truths can become the difference between selling your property quickly or not at all.
When setting your asking price, keep in mind:
The most important factors to take into consideration when pricing your property are the current market, recent comparable sales, and the property’s condition. It also can be helpful to look at the market as though you are a buyer to get a sense of how your price will compare to other comparable listings. Recent sales prices should carry a bit more weight than current listings when determining your asking price.
What you paid for the property is not relevant when it comes to setting an asking price. A property’s value is based on a specific time, date, year, market, etc. The reality is you may be able to sell your property for significantly more or significantly less depending on the market when you go to sell.
What you own on your loan has no bearing on the value of your property. It may affect your ability to sell if the market doesn’t support the asking price or final sales price needed to pay off the loan. If you must sell and the market will not provide for a sales price that will cover the costs of sale and your mortgage payoff, there are other options, like bringing money to closing or possibly negotiating a short sale with the bank.
An appraisal of your property represents the value of your property on that specific day in that specific market. Your property’s value could change in a day, week, month, year or years, depending on the temperament of the market. An appraisal also does not guarantee a buyer will pay that much for the property, it means the comparable sales and current market reflect that value.
An assessment (by a town or county) is not an appraisal. While it is generally a licensed appraiser that is calculating the assessment, the values are generally derived with “broad strokes” in that the values based on surrounding property sales and not specific to your property and its attributes. Additionally, assessed values are often 6 months to a year old when they are applied. There are exceptions, but generally an assessed value is not in line with an appraised value. *When I first got my real estate license in Hawaii, the market was rising so fast that you could calculate an asking price by doubling the assessed value for most properties and properties were selling at or over asking in many cases.
Your upgrades do not add a value equal to what you spent on them (this one is often painful for sellers). In fact, some upgrades add value but some can actually detract. Basic upgrades to kitchens, bathrooms, flooring, and “lipstick on a pig” aka new carpeting and paint, generally add value. But, upgrades and painting for your specific taste may not fit the general public. Specific taste upgrades and updating are great when you are living in the property, because you love them and they make you happy. A hot pink room for your daughter, a purple accent wall in the living room, faux painting, and other similar items can distract a buyer and prevent an offer. Best to stick with generic colors, patterns, and materials if you would like to reap the maximum value.
I know this information can be a lot to take in, so that’s all for today’s Truths.
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