Last week I started discussing the important analogy I often use “On the market versus in the market”. There is a huge and significant difference between the two. We talked about the market value of any asset and how your home’s selling price is dictated and determined by what a buyer is willing to pay for your home today in the current market environment. We all have heard the saying “what the market will bear”. And that has never been truer than in 2013.
With all the recent positive news on the Internet, television and in the print media, sellers can tend to be overconfident that their home has appreciated year over year. In some cases and regions of the country that can be the case. There are areas within Savannah that home contract and closing prices have stabilized and have even risen slightly. In most cases they have stabilized and have not continued to decline in market value. A few of the reasons for this can be consumer confidence and the shrinkage of inventory in the local area of homes for sale. Buyers are also aware of low interest rates and the likelihood of rate increases in the future are inevitable.
Your perceived value of specific items in your home may or may not be the same perception that a buyer has or hold the same value for him/her. Some examples might be a swimming pool or Jacuzzi, custom made draperies and window treatments or other “decorator items.” Another item might also be a fence. We actually have seen homes where the original owner had paid a premium for the lot or view and then it had been shrouded with a solid or board on board fence. In other words what was and is important to you the seller may or may not be important or hold the same value to the potential buyer.
When the real estate market was robust and hot there was a “fear of loss” for the buyer created by supply and demand. In today’s market if a buyer loses a home they were interested in, they move on and focus on another property. Buyers are somewhat more disciplined and in many situations there is not a sense of urgency and time is their ally.
There are different ways to think of and value your home. Owners tend to value things more than buyers do simply because they own them. Human nature is that there is more sensitivity to losses versus gains. The appraised value of your home is an appraisers opinion of the value of your home at a given or specific point of time. All lenders do require an appraisal. Market value is what the house will sell for at any given time and the buyers and the market both dictate what that price and threshold will be.
When I was listing a home this week the seller was very knowledgeable and realistic, and acknowledged the timing for her sale was not optimal as far as the market. In her mind she accepted that and wanted to move on with her life. We always tell a seller that there is a value to closure and moving forward and that value is always a personal decision: an intangible that solely is the seller’s decision.
Listings that extend over a long period of time become stale and lose their freshness. Often the first offer, if there is one can be your best offer. When consulting with sellers we always discuss carrying costs and the constant need to be flexible, temporarily displaced and accommodating, all while maintaining a presentable product. Do not let this happen to you and own a stale listing. Be reasonable and realistic. Always remember the sole reason you list your home to sell, is just that. You want to sell it. Your objective always should be that you want to attend a closing and sell your home in a reasonable amount of time.
Always remember to hire a local and professional REALTOR. Be optimistic, realistic and as difficult as it may be, take the emotions out of pricing and selling your home. It is a business transaction.