What Everyone Needs to Know About Pricing a Home
When it comes to pricing a home, there are a few things that both buyers and sellers need to understand. I’ll go over everything you need to know today.
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When it comes to pricing a home, buyers want to negotiate even after the agents have done all the work, while sellers sometimes don’t listen to their agent when it comes to pricing. I want to go over a few things that both buyers and sellers should keep in mind when it comes to the price of a home.
Let’s say that a buyer sees a house that is priced at $140,000 in a $160,000 neighborhood. Even though the home is priced below the neighborhood, the buyer still feels the need to negotiate and get an even lower price.
Keep in mind that when an agent prices a home, nine times out of 10, they will meet with the seller and go over everything about the house. The agent will take the location, condition of the home, condition of the roof, furnace, and AC, and the number of kitchens and bathrooms into consideration when coming up with an accurate price.
If it was as simple as going to Zillow and putting the number of bedrooms, bathrooms, and square footage into the computer, then you wouldn’t need an agent or appraisal. However, that is not how pricing works.
Zillow’s Zestimates are out of control. Nine times out of 10, Zillow’s Zestimates are completely wrong. Zillow looks at the number of bedrooms, bathrooms, and square footage. Zillow also looks at the last 30 days of sales within a two-mile radius of your home, which includes all different kinds of homes.
There is only so much money in any given transaction.
When you sell houses, you can’t compare a ranch to a three-story home. You have to compare apples to apples. Not only that, Zillow has no idea about your new kitchen or whether or not you have hardwood floors. All of those upgrades you’ve made factor into the price of your home.
So, let’s go back to that $140,000 house in the $160,000 neighborhood. The home has a 25-year-old furnace and a 25-year-old roof, but other rooms have been updated. The agent has already taken that information into consideration when they priced the home. The problem is that buyers will look at the home and think they can come down on the price because they will need to replace the roof and furnace, even though the home has already been priced for that!
Even if you have a new roof and furnace, that doesn’t mean your home will be priced above your $160,000 neighborhood. Buyers expect that you will have kept up with the maintenance on your home.
Still, buyers feel they have to negotiate with the seller to come down on the price, get them to pay closing costs, and then fix all of the repairs in the house. Keep in mind that there is only so much money in a transaction and that the home has already been priced lower because of those repairs. If you as a buyer are asking for so much, how will your offer look to the seller? It won’t look like a win-win situation, that’s for sure.
If you have any questions about this topic or have another topic in mind you’d like to see me discuss, please feel free to reach out to me. I’d be happy to help.