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Sellers....Another Misconception You Should Know

A lot of times while on listing appointments or just in general conversation, I hear people commenting on what their home "should" be worth and all the reasons to support their theory. Before asserting my opinion, let me just say that buyers are the ones that determine the value of your home. It is what a buyer is willing to pay that determines how much you get, not any other factor. The buyer is influenced by comparable sales which their buyer's agent will no doubt point out to them; as your listing agent should point out to you.

The issue that puts certain sellers in a bind is that they feel certain things about their house should constitute more money in the final sale. While some things do, a lot of things do not. Let me explain. If you live in a neighborhood where all the houses are between $180K and $220K, 1800 and 2400 square feet, have vinyl siding, popcorn ceilings and solid surface counter-tops, when you sale your home you should look at those comps. Well, if you added fiber cement siding, smooth ceilings and granite counter-tops, it is very likely you will not recapture that money you put into your home. What happens is now your home does not conform. If your home is not like other homes in the neighborhood it is hard to compare it to any of them. Well buyers are not going to buy a home in your neighborhood that out-priced itself. In other words, if they want to buy a home with those features, they are going to a neighborhood where you usually see those features. These are vague examples, but the proof is in the pudding. Statistics.

For arguments sake I am going to use my house as an example. I put up a fence in my backyard and it cost us around $5,000. Now when I sell my house I cannot expect to get $5,000 more than an identical house next door minus the fence. WHAT IT DOES is make my house more attractive and more likely to sell than my identical neighbor who is selling at the same time.

When you are considering doing certain things to your home, look your neighborhood in general. Another example is if you are buying a home to flip in an area where most homes have laminate flooring and laminate counter-tops....DO NOT put granite counter-tops and tile flooring in......that is like putting lipstick on a pig or whip-cream on an onion. And if you didn't know this was coming....Please don't pay too much attention to the Real Estate Reality shows on TV....they are not that Realistic!! For more information please visit us here.

Posted by Stu Barnes on 02/15/2008 10:06 AM

Comments (8)

real estate reality shows, remodel, conform, seller misconception, upgrades, outpriced, listing appointment, raleigh nc, statistic

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8 Comments on Sellers....Another Misconception You Should Know

Good advice. The buyer does set the price....and adding a pool does not mean you are going to get the cost back.

02/15/2008 10:14 AM

by Gary Waters - Real Estate Agent Viera Suntree (Century 21 Baytree Realty www.moving2brevard.com)

Great Advice. Another thing I get all the time is replacement. Replacing your twenty year old a/c becuase it died does not quailify as upgrading the house.

02/15/2008 10:17 AM

by Mary Bowen The Woodlands Realtor & Relo Specialist (Coldwell Banker United)

It may not sell for more but it might sell faster because of the improvements.

02/15/2008 10:34 AM

by Terry Westbrook ~ Realtor(R) Grand Rapids Mi Ada/Cascade Real Estate (Five Star Real Estate, LLC Grand Rapids , MI)

Stu! Another good reason to BUY UP instead of spending $75K for a new kitchen like my neighbor did! Went to sell - and guess what? That 75K put him to far outside the neighborhood values

02/15/2008 10:44 AM

by Eleanor Thorne, Cary Mortgage Loans (Meridian Residential)

We all understand why sellers might feel this way but agents need to get this message into their heads also. It's so importnant to counsel their sellers properly and keep listing prices realistic.

02/15/2008 10:51 AM

by Ken Rivera - Turlock (American Pacific Mortgage)

People have to know that "upgrades" usually help sell a home, but they more than likely won't increase the value. I actually had a lady point out her very nice light switches as an upgrade...what.. they are light switches.

02/15/2008 10:59 AM

by Chelle Gassan-NOVA Realtor and Stager (Weichert, Realtors and Staged Homes VA)

Buyers do not care what the home was worth. Buyers do not care that someone else would have paid more for it yesterday.

I paid a few thousand dollars for a computer 20 years ago that did less than a modern IPhone. If I went back to the manufacturer of the computer and told them I wanted my money back because it was no longer worth what I paid for it they would laugh me out of the store.

What I paid for the computer 20 years ago was fair market value (what a willing buyer paid a willing seller). Today fair market value on that device is much less than it was 20 years ago. Today's fair market value is "0" and because that is all a 20 year old computer is worth to a willing buyer.

Sellers set an expectation of what they wish to ask a buyer to pay. In all markets BUYERS set prices because the buyer decides what they are willing to pay.

For many years buyers let the news media, mortgage companies, appraisers and Realtors convince them to pay more for homes because the value "had to go up". The news media, mortgage companies, appraisers and Realtors were all wrong. The only thing that has to go up are taxes. Other markets float up and down.

Sellers who waited for prices to drop were greedy. Buyers who are waiting for prices to drop will benefit when sellers come around.

02/15/2008 10:59 AM

by Sellers

For the response posted at 10:59am without a name.....you lost me....I really hope you are not comparing a home computer to a house purchase.

02/15/2008 03:02 PM

by Stu Barnes (Barnes McQuade Realty)

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