It’s fascinating the way folks estimate the value of their homes when they’re getting ready to sell….and the trouble they run into when they ignore real estate professionals’ advice that they’re pricing too high. Quicken Loans does a monthly national study of homeowner over-estimations of value compared with actual appraised values and guess what: The gap between owners’ “opinions” of value and the real world is higher this summer than it has been in years. People have grander notions of real estate value than the market will pay them.
Part of the reason is plain human nature: We all tend to think our houses are pretty special. We know how much we’ve poured into upgrading them and we think we know roughly how much prices have risen in the neighborhood since we bought. Plus we KNOW exactly how much the McFaddens down the street got for their house, which is nowhere near as nice as ours. So we figure, heck, we should get thousands more than they did.
Right!! This is where experienced listing agents earn part of their commissions. They show owners what values are really like for comparable homes in the area. They offer current market data and talk sense to sellers who want too much. Or at least they try to.
Quick story here about two guys I know. They are both highly successful in their fields – one is an independent businessman, the other is a financial counselor. They both run their own companies, are highly intelligent and well educated, have strong personalities, and, truth be told, are used to getting their own way. Both absolutely loved their homes and were positively certain they’d sell for premium prices.
But both houses, nice as they were, had features that were guaranteed turnoffs to many potential buyers: They didn’t have a lot of curb appeal. Interior spaces were not in sync with current buyer tastes, meaning purchasers would have to spend money on remodeling. In one case, the house had virtually no back yard, ruling it out for families with children. In the other case, the seller had made some highly personalized and unconventional changes to the house that looked a little weird in the immediate neighborhood and would never “pay back” at sale.
You know where I’m headed: Both disregarded advice from experienced agents and finally signed with one who would list at the inflated asking prices they wanted. Both houses got plenty of walk ins at open houses but no serious bites, no offers except wild low-balls from investors. (The word was that buyers’ agents were bringing in prospects to make their own firms’ listings appear more reasonably priced.) Both homes sat for months, after which time the sellers switched to experienced agents and lowered their asking prices. Still no action – when you price too high to start you can poison the well for a long time.
More price reductions, then finally after nine months, one house went under contract, but roughly $400,000 below the initial list. The other house, in the Midwest, still hasn’t sold after a year and is now on its third realty firm.
The moral for me on pricing: If you’re a headstrong personality used to getting your own way and you’re absolutely convinced your house will command a towering price, take a deep breath. Then bring in real estate professionals who specialize in selling in your neighborhood and LISTEN to what they tell you.
Don’t assume you know better simply because you do well in your own chosen field or business. Advice for everybody else: Ditto. I credit Bert Rogers School of Real Estate and Ken Harney, nationally syndicated real estate author and writer for the Washington Post.