Separating "VALUE" from "SALEABILITY

Real Estate Agent with Freedom Group Global 471.009781
Separating "VALUE" From "SALEABILITY"

An error commonly made by sellers when pricing their homes is that they fail to distinguish renjith krishnan / value from saleability.  The value of a home references the factors related to the property to cause it to be worth more or less than other properties.  Saleability references the factors related to the property that cause it to be more or less salable than the competition.

Some factors that create value are : Location, Location, Location.  If you're in a more desirable location, you'll get more money than a similar house in a less desirable location.  Examples of more desirable locations would be lake front, wooded or park view lots.  Less desirable would be homes that back up to the sewage treatment plant, a busy highway or the ugliest house on the block.

The number of bedrooms and baths, square footage of living area, a basement (whether finished or unfinished) and garage size are examples of amenities that will get a seller more money for than other properties that are lacking in those areas.  Generally, more is better.  Except in the case of cockroaches, weeds and repairs that need to be done.

Many sellers incorrectly believe that components of a house may add value.  A new roof is a good example.  The seller believes that because they just spent $8500 on a new roof that the home will be worth more, but this is not the case.  It will make the home more salable, but it adds little value, if any.  Why is this?  Because buyers expect homes to have a roof in good condition.  If the roof is in poor condition, the buyer will de-value the home because they anticipate having that expenditure in the near future, but they will not add value because it is new.  

This would also apply  to updating a kitchen, bathroom, carpeting, new furnace or hot water heater.  Buyers expect these items to be functional.  They make the home more salable.  Some appraisers I've spoken to add only 40% of the cost of additions to the home such as for a fence or finished basement.

"My house has all these upgrades!  We have six panel doors, extra plush carpeting and top notch appliances."  So sorry you paid more for these features when the home was built, but its unlikely you'll recoup the extra cost when you sell.  You might get a little more than your neighbors who don't have these features, but primarily, it just makes the home more salable.

One caveat:  if you're in an area where all your competition has those benefits, you should, too.  That's what buyers expect in homes in that area.  If you have six panel doors, but most homes in your area don't, buyers will not pay you much more, because it's not an expectation.

So when determining your asking price, make a list of all the features and benefits that your home has to offer.  Then, consult with your agent to determine if those features/benefits add value or make the home more salable.  It will save you from having to make a series of price reductions later.  

Tim McColly contributed to this post.

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Steve serves the real estate needs of buyers and sellers in Shorewood, Plainfield, Joliet, Crest Hill, Romeoville, Bolingbrook, Oswego, Minooka, New Lenox, Aurora, Naperville and NW Will County.  Specializing in short sales, investment properties and first time home buyers, Steve attacks problems with a tenacious outside the box approach and keeps working where many others would have given up.   

To learn more visit or download my mobile app. Specializing in Shorewood IL Real Estate, Plainfield IL Real Estate, Joliet IL Real Estate, Minooka IL Real Estate, Channahon IL Real Estate, New Lenox IL Real Estate, Oswego IL Real Estate, Bolingbrook, IL Real Estate, Romeoville IL Real Estate, Naperville IL Real Estate. Buyers can save between $1,000 and $5,000 by working with us! 



Ken Brandon
Coldwell Banker Sea Coast Advantage (Jacksonville, NC) - Jacksonville, NC
Camp Lejeune, Jacksonville, NC

Very good information for all sellers. For us, oftentimes we have to help align seller's expectations with market realities. Value and saleability are two of the things that have to be included in that discussion.

Nov 19, 2011 01:53 PM
Steve Warrene
Your Town Realty - Lower Burrell, PA
Pittsburgh Realtor North and East Pgh.

Steve, Mike Cooper says it exactly the way I tell it to the sellers.... Overpriced simply means overlooked. 

Nov 19, 2011 11:03 PM
Judi Monday
RE/MAX Valley Properties - Green Valley, AZ
CRS-Green Valley AZ Expert, Green Valley Arizona R

You are so right.  We need to help Sellers distinguish between what adds market value and those things that simply add value. 

Nov 20, 2011 06:06 AM
Kimo Jarrett
Cyber Properties - Huntington Beach, CA
Pro Lifestyle Solutions

Excellent post and illustration. Your post has provided me an idea and a tool to incorporate in my marketing plan.

Thank you for sharing your information.

Nov 20, 2011 06:36 AM
Jack Mossman - The Nines Team at Keller Williams in Lodi
The Nines Team at Keller Williams in Lodi - Lodi, CA
The Nines Team in Lodi

Steve ... I wish that folks would read your thoughts ... before they spend the money to rehab, thinking that thery'll get it back when they sell.  Great points - thanks for sharing!

Nov 20, 2011 06:54 AM
Kate Akerly
Kaminsky Group - Manhattan Beach, CA
Manhattan Beach Residential Sales

This is definitely a concept some sellers have a hard time internalizing.  We just worked with a seller who owns a 100 year old building.  The owner provided us with a list of dozens of maintenance tasks that had been completed over the years and wanted us to decide "how much it was all worth."  We're talking about things like servicing a boiler and repairing the roof.  I really don't believe they ever understood the point and just thought we were crazy for not adding a $100k to our pricing in light of all the mainteance that had been done.

Nov 20, 2011 07:20 AM
Coral Gundlach
Compass - Arlington, VA
Real Lives. Not Just Real Estate.

Great breakdown of a concept so many sellers don't understand.  They think they will get back 100% of what they put in for things like carpet, electrical, plumbing, type things.   Not so fast.  Congrats on the feature too!

Nov 20, 2011 08:02 AM
Linda Jamail Marshall
Linda Marshall,Houston Texas, Linda Marshall, Realtors® - Houston, TX
Broker, ABR,QSC,RECS,ACRE - Innerloop Houston, Tex

I think you hit the nail right on the head, with your permission I will add to my listing presentation package.

 Greetings From Innerloop Houston, Texas

Linda Jamail Marshall, Broker


Nov 20, 2011 08:30 AM
Teresa Duguet
Briarcliff Manor, NY

Excellent.  We always need new ways to tell the same thing to sellers, value is not saleability and you articulated it extremely well.  Thanks and I will give to some of my sellers, if you don't mind.

Nov 20, 2011 09:22 AM
Allyson Hoffman
RE/MAX Properties Northwest - Park Ridge, IL
Making Today's Dreams Tomorrow's Reality!

Great post and very clear distinction!! Thanks.

Nov 20, 2011 09:45 AM
Yvette Chisholm
Long & Foster Real Estate, Inc. - Rockville, MD
Associate Broker - Rockville, MD 301-758-9500

Very good post.   Everyone needs a roof!   A buyer might buy your home over another one because your home has a new roof, but they certainly don't want to pay extra.   Hard concept for sellers.

Nov 20, 2011 09:51 AM
Carol Tunis
Florida Homes Realty & Mortgage - Saint Augustine, FL
Carol Tunis...a "HouseSold" name!

Excellent post.  Direct and to the point. 

Nov 20, 2011 10:13 AM
Melanie Thompson
Mortgage Equity Team - Lynchburg, VA
Registered Mortgage Advisor

I love seeing the listings that have "10K in all new plumbing" with pricing to match, but the third bedroom ceiling is falling down, there's purple paint everywhere, and some truly awful wallpaper. Those sellers and agents have a hard row ahead.

Nov 20, 2011 10:47 AM
Michelle Francis
Tim Francis Realty LLC - Atlanta, GA
Realtor, Buckhead Atlanta Homes for Sale & Lease


Great way to look at it and share with the sellers.  When your "upgrades" are what is expected, there is not as much value in having them. 

All the best, Michelle

Nov 20, 2011 11:15 AM
Mary Macy
Top Agents Atlanta Metro - Roswell, GA
Top Agents Atlanta Metro

Good post, points out some of the most misinterpreted items that sellers believe add value.  Thanks.

Nov 20, 2011 01:19 PM
Praful Thakkar
LAER Realty Partners - Burlington, MA
Metro Boston Homes For Sale

Bookmaked your post, Steve. This is what every seller should know (and understand). Really great post.

Nov 20, 2011 01:28 PM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

That reminds me of all the charts about what percentage of cost a remodel will ad to the value of a home.  My thought is if it only adds a percentage why do it at all.  The reality is your home needs to reflect a certain accepted standard if you want to get the value out of it.  I think you summed it up well.

Nov 20, 2011 06:12 PM
Lyn Sims
Schaumburg, IL
Real Estate Broker Retired

I just did a post similar to this regarding upgrades. Sellers are under the misconception that every $$ they put in they will get out. As you clearly state, all homes need roofs and they should be in good condition.

Nov 21, 2011 06:43 AM
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Hi Steve,  So true when here in Florida homes are selling 20-30% below replacement "values".  But that is wher they are selling!

Nov 21, 2011 11:31 AM
Sylvie Stuart
Realty One Group Mountain Desert 928-600-2765 - Flagstaff, AZ
Home Buying, Home Selling and Investment - Flagsta

Very good distinction and example of the roof. I've gotten that plea a lot, and it's true, it's expected. Great post!

Nov 29, 2011 12:51 AM