A Few Home Valuation Myths
Buyers and sellers have the perception that homes are by default priced 10% over their value. A buyer could miss an opportunity on a house they really love by making an offer that is much lower than the asking price even though it is a fair valuation. If someone else comes along and offers the full asking price, you will miss out. There is no rule that agents will use in order to inflate the asking price above the valuation. Agents will generally make pricing recommendations to home owners based on a comparative market analysis. Therefore, it’s best to make an offer within the range of the asking price if they are asking a fair value. You really need to be aware of the market when making the decision on what to offer. Working with an experienced agent can alleviate a lot of heartache. I’ve seen deals backfire when people make a low-ball offer. They lose out on a home they really love.
Sellers will sometimes have the same perception that they need price their homes higher than the actual value. It’s best to price the home within the range of what the market will bear. The market will realize that this house is priced right where it should be, and will likely sell more quickly. Usually we will determine a price range of similar homes in the area and use that to determine a good price range. Some sellers want to try the higher end of that range first. It’s never recommended to price outside of that range, because when a home is on the market for a long period of time, it becomes more difficult to sell. If you price high and don’t get an offer soon, you should plan to reduce your price early on. If a home is on the market for a long period of time, people begin to think there is something wrong. You can sabotage yourself by not pricing correctly in the beginning. You may end up having to reduce the price down to the lower end of the range now because people have a negative perception of the home, regardless of whether there is anything wrong with it. If you would have priced within the middle of that range to begin with, you may have been able to sell at that price, but by pricing too high, there is now a negative perception of the home. The most crucial time in marketing your home is the first 45 days!