In almost every conversation I have with potential sellers, the conversation begins with the line “I’m not going to give my home away!!” Despite the comps, there is the perception that they are being cheated on the price. Typically, the conversation will include a list of all the past projects and improvements made on the house. If it was purchased during the peak of the market, the owner will mention how much they paid for it. And, of course, the appraised value was this much just 3-4 years ago, how can it be worth so much less?
I am reminded of the caveat used in the stock market. “Past performance is no guarantee of future value.” Market valuation– whether you are talking about stocks, cars, housing or anything else—is determined by what current buyers are willing to pay. The price that buyers are willing to pay is based on the asking and sold prices of today’s choices. Remember the tech bubble of the nineties? That was fun while it lasted. The returns were so high that you could withdraw money and the market would make up the difference within months. However, after the bubble burst, many of those same stocks were worth a fraction of what they were at their peak. Markets have cycles. Financial markets have cycles. Housing markets have cycles. Prices in this cycle just benefits the buyer rather than the seller (although prices are increasing).
You are not giving your home away if you sell it at market value. However, you can be guilty of giving away some of your price. If you insist on initially pricing your home higher than the market value, you give away some of your price because over time buyers lose interest and view homes on the market longer with a perception of declined value. In fact, small incremental price changes often result in homes being sold at less than market value. As a seller, you want to capture buyers at the peak of interest. This is usually the first few weeks on the market.
You also might be guilty of giving away a little bit of your price when your home is not presented well. Exterior curb appeal and a nice interior help your home stand out in any market. Although the current market has a tighter inventory of homes, buyers can still be picky. This is a big investment for buyers. Also, many buyers prefer a home that is in move-in condition.
Finally, you may be giving away some of your price if you don’t allow interior pictures. Most buyers start on-line and interior pictures are a big part of marketing your home on the internet. It is documented that homes with few or no interior pictures are not clicked on (viewed) as often as those with more interior pictures. Buyers and even some agents assume that a lack of interior pictures is an indication of problems with the condition of the home. They never even request the showing to see how lovely your home actually is. You want your home properly marketed in the place where buyers are looking.
For those still focused on the costs of past improvements and projects of their home, you just have to let go of the idea that you will get a dollar for dollar return for those past expenditures. Actually, in most cases, you never get a 100% return of your costs. What those projects will do is have your home viewed as a comparable home for other homes in similar condition. The value of your home is compared against other homes with gourmet kitchens, hardwood floors and new roofs. Often, these homes are selling at a higher price. The fact that you have invested in your home does matter but only in the context of what’s happening in this market not the past.
Millie C Lumpkin, CDPE, SFR
Broker
EXIT Strategy Realty
Mobile: (312) 217-5644
Email Me: millie.lumpkin@gmail.com
Visit My Website: http://ChicagoSouthHomes.com
Read My Blog: http://ChicagoSouthRealEstateBlog.com
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