People often make a critical mistake when deciding on a price for their home. Rather than answering the question of what their house can fetch on the open market, they focus on what the property is worth to them. There’s a big difference.
Paying attention to the correct, objective factors when determining your house’s value will yield an asking price 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? I’m glad you asked…
What you paid
Unless you bought your home a month ago, your sales price has no bearing on what a buyer should pay. Even if you did buy your home a month ago, the purchase price may not reflect proper pricing for today. The real estate market changes constantly.
How much you spent on repairs
You just spent $2,500 to fix some plumbing and replace the water heater? Good for you. While you’ll certainly enjoy taking hot showers once again, that doesn’t mean you can add the cost of your repairs to your asking price. Running hot and cold water in a home is usually a given, not an enhancement that increases the price.
How much you spent on improvements
Building a new deck, remodeling your kitchen, or adding a half bath certainly increases the value of your home. Just don’t count on getting a dollar-for-dollar return on your investment. In fact, Remodeling magazine's most recent "Cost vs. Value Report" shows that if you build a 16' x 20' composite deck, you should expect to increase your sales price by about 70% of the cost of the project.
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 all across the state. However, unless the other 299 are in your neighborhood, 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
As I mentioned, real estate markets change constantly. It’s useful to know the sales price of a similar house that sold in your area some time ago, but take it in the context of what’s going on today. A seller’s market that spawned numerous bidding wars a year ago could now be a solid buyer’s market. If that’s the case, you need to set your expectations – and price – accordingly.
How much you need to purchase your next home
Whether you’re flush with cash or broke, your home is worth the same. Whether you’re moving up or downsizing, your home is worth the same. Whether you’ve paid off your mortgage or still owe most of the balance of the loan, your home is worth the same. Your financial situation isn’t relevant to a buyer.
Your 25 years of memories in the house
The memories that are priceless to you are 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, the location, 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 Texas Realtor to help you arrive at an accurate valuation.
For your real estate needs, please contact RE/MAX Genesis at 830-833-2000.