When I was in the financial field, people would ask me a question, then usually listen pretty carefully to my answer. Only a few ever said something like “I don’t think you’re right. My uncle, the dentist, said never to buy stocks.”
One of the challenges of real estate is sellers taking “non-expert” advice on what to do. The following are statements prospective sellers have made to me over the years:
“$300,000? My brother said my home is worth at least $425,000.” “What does your brother do?” “He’s a truck driver in Florida.”
“No, no, you’re way low. My uncle said my home is worth at least $50,000 more than that.” “When did your uncle last see your home?” (It was quite run down) “He’s never been to Lake Gaston.”
The key thing, and almost the only thing, that matters in pricing real estate is what similar homes are currently selling for in the local market. The four key words are “similar”, “currently”, “selling”, and “local”.
Similar means if you’re selling your 2 bedroom, 1 bath home that’s on a steep lot and that needs a lot of tender loving care, it’s pretty irrelevant what the Smith’s 4 bedroom, 3 bath home that’s on a flat lot and in immaculate condition sold for. Currently means recently, roughly in the last 3 months. Markets change, and since we’re selling in the current market, we want to know what similar homes sold for recently.
Selling meaning what it actually sold for, not what its list price was. I can’t tell you how many times someone has said to me “Well, the Smith’s house sold for $480,000” but when I searched the records, it turned out it sold for $420,000. Local means in our case, of course, around Lake Gaston. There’s an old saying that’s true that all real estate is local. Thus it’s irrelevant what houses on Smith Mountain Lake (a higher priced lake) or Kerr Lake (a lower priced lake) sell for.
A good realtor will find 3 or so recent sales of similar house to help price yours. And keep in mind, there’s no perfect house. We recently listed a 4,900 square foot home for $990,000 that was immaculately maintained. Looking at it from the outside, I though “The perfect house!” But, it took 8 months to sell in a strong market. Why? It had a lot of small rooms rather than the fewer, but bigger rooms that Lake Gaston buyers prefer.
Your Good Realtor will candidly tell you the pluses (easy to do) and minuses (hard to do) of your house. Beware of the agent who only tells you what you want to hear, pleasant as it is in the short run.
She will then take the 3 or so comparable homes and adjust each one financially so it’s as similar to yours as possible. “This house sold for $380,000, but it doesn’t have a 2 car attached garage like yours. So we’ll add $29,000 to its selling price to get a financially comparable price of $409,000.”
Then, Good Realtor will summarize along the lines of, “I would suggest you list your house at $424,900 and take any price above $410,000. Right now, properly priced waterfront homes are selling on the average in around 4 months.”
Now that you know how to price your home, on to "We’ve Listed our House for Sale!"