Every One thinks they are an Expert
I was reading an article written for Houselogic.com about pricing “Your Home”. Actually, the information could be used to price the home you want to sell or the home you want to buy.
After reading the article I came away disagreeing with some of what the expert had to say.
I agree that pricing a home based on data, not emotion, can mean a swift sale. That’s a no brainer and has to do with that ‘endowment theory’ mindset I have talked about before. However, I do not agree that “home pricing is more of a science than an art”. Home pricing is an art; it is an educated ‘guesstimate’. Any appraiser will testify to that, and the reason why is because no two homes are the same and no two properties are the same – there are too many variables for a scientific conclusion to result. The author claims “crunching the numbers is always the better route to an accurate home price”. Well, it beats throwing darts at a board, and appraisers do crunch numbers to a certain extent but it is their professional experience that guides their final analysis and ‘appraisal’ of a property.
From this preface the author goes into various topic headlines. The first one is “The Pitfalls of Overpricing”. Let me tell you, overpricing can be the kiss of death and for some reason seller agents do it all the time here on Martha’s Vineyard. I suppose the rationale that has proven true is “you never know”, or as I like to say, paraphrasing what allegedly PT Barnum once said, “There is a sucker born every minute”. That is becoming less and less true due to both the advent of the Exclusive Buyer Agent giving buyers their own advocate and due to more and more information (?) becoming available on the Web. Nevertheless, overpricing is part and parcel of the real estate marketing game and, as I said, it can be the kiss of death. Besides the fact that it will take much MUCH longer to sell a home, the author rightfully points out “Continually lowering the price could turn off potential buyers who might start wondering just what is wrong with your home.”
Under the next topic, The Pricing Trap, the author points out that it is wrong to think that ‘renovations’ will “result in a dollar-for-dollar increase in the selling price – or more.” There are dozens of articles out there listing the best bang for the buck upgrades and improvements, and those that are not so good but should be looked at as enhancing the owner’s quality of life while they own the house. This is more a cautionary for would be home sellers and don’t forget that some improvements you make may just be improvements the buyer would want to make according to their taste. Also, those fruit trees in the front yard that you think are so special – take them with you because a buyer is not going to pay extra for them.
Now here is an interesting adage: “Don’t buy the nicest home on the block”. That is most certainly true in America but on Martha’s Vineyard it actually works in reverse. Martha’s Vineyard is old and so are most of the homes here, with many of those old homes in varying stages of disrepair and decay. The life of a modern home today is about 40 years which would apply to those built in the late sixties, early seventies and certainly most of the crap that was thrown up during the 80’s. Sure, we have some wonderful old antiques that are hundreds of years old, but to renovate them can cost as much or more than if you were to tear them down and build a modern replica. Yes, we have the talent to do that here on Martha’s Vineyard. Anyway, the point I am making is that if you buy or build the biggest house in the neighborhood eventually it will inspire and encourage others to follow suit. That’s how the Vineyard will go through a renaissance once we have a strong economy again, although there are a number of projects like that going on right now.
I totally agree with the author when she points out that Zillow’s Zestimate’s are a factor in the incorrect pricing of homes for sale, or even for buyers to rely on when looking for and making offers on homes. “The estimate is often wildly inaccurate.” Yup, you bet it is. Stay away from Zillow … ask a professional real estate licensee and make sure that licensee is a REALTOR®. Ask me, I’m a REALTOR® and a True Exclusive Buyer Agent – I Represent People, Not Property.
The rest of the article is irrelevant for the purpose of my writing but if you want to read the whole article for yourself go to Not Sure How to Price Your Home?