Here in Northern Nevada, we are blessed with an abundance of scenic beauty. We are circled by mountains, including the spectacular, snow-capped Sierra Nevada range to the west. From many areas of town, one enjoys sweeping views of the Truckee Meadows and the twinkling lights of downtown Reno and Sparks. When it comes time to list your home for sale, how much value is added by that breathtaking view?
This can be a tough, emotional question to answer. Most sellers, of course, would like to believe that their view borders on priceless, but will settle for a large premium added to their listing price. While buyers often enjoy and even seek out view properties, in this market they may be inclined to discount some or all of that premium. Unfortunately, if you want to sell your house, the view is worth exactly what a buyer is willing to pay for it, and not one penny more. And if the buyer is getting a loan, the appraiser will also weigh in.
What methods might a seller use to determine the listing price they want on a property with a dynamite view?
Option 1 - Fantasy Optimal Method. Start by finding two recent sales in your neighborhood that are similar in almost every respect: age, size, floorplan, general condition, etc., except that one of them has a view and the other one does not. Next verify that neither had any special conditions of sale; arms-length transactions, not distressed properties, no seller concessions. Then make the (still possibly incorrect) assumption that the remaining price differential is due to the view.
Option 2 - Lot Premium Method. Find two vacant building lots in your area, again one with and one without a view. Assume the lot premium applied to the view lot (as a percentage) is the amount of premium that could be applied to the land portion of your property's value.
If many of the recent sales in your neighborhood are distressed, either short sales or bank-owned properties (common in neighborhoods in all price ranges here in Reno and Sparks), and/or you can't find two recent sales that are otherwise similar enough (likely), and there are no vacant lots in your area, then we move on to:
Option 3 - Gut Instinct Method. Spend some time looking at recent sales throughout your area, preferably on Zillow. Get a general sense of how much more was paid for homes with views. Zero in on the data that supports your preconceived notions. Pay no attention to those pesky differences from one neighborhood to the next (Zillow doesn't).
Option 4 - Arbitrary Increase in Listing Price Method. Look at comparable sales in your neighborhood and then tack on an arbitrary XX% more to your listing price because your view home is so clearly superior to those others.
And finally...drum roll, please...
Option 5 - Professional Method. Have your REALTOR® help you fine tune your listing price; he or she will have extensive experience with the local housing market, including the current value of homes in your neighborhood and the traditional premium placed on a view, all backed by hard data. (S)He will also be tuned in to the recent behavior of the buyers in your market.
Something to keep in mind if you overvalue that view: you will limit showings and offers to only those buyers not put off by your inflated price. And even if you find a buyer crazy excited enough to offer you that premium, if the appraiser can't support the contract price with any comparable sales, you may well find yourself out of a deal.
Comments(0)