A survey of home buyers and sellers by HomeGain.com showed that 76% of homeowners believe their home is worth more than the list price that was recommended by their real estate agent.
This was a nationwide survey but it applies just as much with homes for sale in San Ramon and Danville etc. as anywhere else in the country. Maybe more so.
Buyers generally have a more accurate idea of current market value than sellers in the same area. This is particularly true when they have been actively looking at homes for sale for a couple of months or so. They look at lots of new listings, write offers, and the find out what homes actually sell for as opposed to what they were listed at. This gives them the information they need to write an offer on a home based on the value as opposed to the listing price.
Your home is worth what a buyer will pay for it based on recent sale prices of similar homes. This may be very different from your opinion of what your home is worth or what it should sell for.
Your prime window of opportunity to sell your home for the best price is within a couple of weeks of it being listed for sale. Buyers are eagerly awaiting new listings, and most showings, and the busiest Open Houses take place in the first couple of weeks. If your home is priced right, offers should come in quickly. There really is a lot of demand for homes for sale in San Ramon, Danville and surrounding areas.
So how do you set the right price? It should help to know how appraisers and real estate agents arrive at a valuation for your home.
It all relates to what similar homes have sold for recently. An appraiser considers only the past 3-6 months and looks at sales of homes of a similar age and size to yours that are within a half-mile or so. Analyzing that data enables him to arrive at a range of selling prices per square foot and this can then be applied to your home to arrive at a likely valuation.
The problem that then arises is that many sellers over value the “improvements” or additional features that their home has compared to the comparable homes mentioned above. A real estate agent or appraiser knows that many of these features add desirability although they may not add actual value.
A pool for example, could cost upwards of $70,000 to install, yet it tends to add little value unless it is an exceptional pool. Similarly, a kitchen remodel that cost you $100,000 may not add any more value than one that cost $40,000.
Also note that if the recent comparable sales had updated kitchens and baths and your home does not, you have to make allowances for that in arriving at a value for your home. This also applies to the quality of landscaping, general condition and even location. A home on a court will always be valued higher than the same home on a busy street.
So how easy is it to find this recent sales data? For the average seller, not so easy. You really have to rely on your real estate agent to show you the comparables as extracted from the local Multiple Listing Service (“MLS”) website. Don’t rely on estimates from websites like Zillow with their Automated Valuation Models. These are notoriously inaccurate, sometimes being over $100,000 out in either direction.
Even that is not the end of the story. Before arriving at a firm price to list your home for sale, you must consider the competition. If you decide your home may be worth around $700,000 and then you can see more appealing homes for sale for less than that price, it is fairly obvious that your home is not worth $700,000 so you have to think again.
If you are have any questions about your personal real estate situation, let me know and I’ll be happy to give you the benefit of my experience. There is never any obligation and I am always happy to hear from you.