Question: Our home has been for sale for too long. When we listed the house, our agent suggested we price the house $90K below the assessed value, stating that the assessment value is used for property tax purposes but that it’s not related to the market value of our home.
We have since completed our move to South Carolina, where our bank representative told us we should never have listed for less than the appraised value. What should we do? Based on the banker’s opinion, we want to increase the price by $90K to the assessed value. We thought we could trust this agent because she was referred to us by a friend. Are we right in seeking the most profit?
In the handful of showings we have had, almost all of them tell us the house is in need of too many updates for the current price. No one is making an offer. We did get a verbal offer of $30,000 less stating that lots of work needs to be done. Some of the updates include flooring (we have vinyl and older carpets) wood repair to doors, windows, since the current windows are original and the house is 30 years old.
Answer: First of all, all real estate sales are local. Your banker in North Carolina probably has little knowledge of our market and the competition you face. And in today’s real estate market, the assessment value of your house may not provide a true picture of your property evaluation in relation to market value in real estate sales. There are many reasons our market is different than North Carolina. Property values have fallen drastically as you well know—a function of the slumping economy.
When you selected your agent you depended on your friend to refer you to an agent you could trust and work with. But now you’re not so sure…some of the questions you can ask yourselves and your agent include:
How about the Market Analysis? If you got one, read it. This analysis includes properties that have sold in your area in the past several months. Generally, there is a price range within which your home will probably fit and you can expect that buyers are also reading this data and their offers will be within this range.
Reread the Market Analysis; see if the included properties were similar to yours. Comparable properties used in the Market Analysis must be as close to yours as possible. (If you have a ranch with a pool, if you have a garage or a large lot, the comparables should too.)
Not all agents compute or discuss an Absorption Rate Analysis. This analysis depicts how many homes are currently on the market in your zip code and at today’s sales rate, how long it would take them all to sell. If your house is average and priced as such, you can see how many months to expect before your house sells. Because the homes that are priced right sell faster, this data will help you decide how to price your property.
Have you asked your agent to help you understand the results of the showings? The fact that you have had a number of showings, with no offers, and some feedback regarding work needing to be done indicates to me that your price may need an adjustment: (not an upwards adjustment but a downwards adjustment.)
One way to find the proper asking price is to pay a bank appraiser to come appraise the property. This will give you a price that buyers will understand. And it will tell you what the bank would be willing to lend a buyer for the purchase. If a bank appraiser comes in with a value of $200,000 and you currently have your property on the market for $250,000 then you will understand that all savvy buyers would know the house was overpriced. But even a dumb but willing buyer would have to bring $50,000 as a down payment since the bank wouldn’t lend over the $200K.
Buyers want the best price. Sellers want the most they can get. Realtors don’t get paid if the house doesn’t sell. We all understand this and want to price the property with you so it will sell quickly and with the least upset to you, at a price the market will bear.
Dane Hahn is a real estate professional practicing in Florida and NH. You can reach him at firstname.lastname@example.org or by phone at 941-681-0312. See him on the web at http://www.danesellsflorida.com/