Pricing Your Property – Emotion vs Logic
A statistical approach to pricing your property . . .
Want to sell your property quickly? Certainly! When you decide to sell it, you want it done as soon and as painlessly as possible, but at the same time, you want to receive as much cash equity from the sale of your property as you think it’s worth.
You bought your property at its base price. You added some things immediately to provide the comforts that you were looking for; items such as blinds and custom drapes, paddle fans, a microwave and a garage door opener. These all add to the value. How about that swimming pool the family convinced you to put in? How much was it: $15,000…or was it $16,000 when you added that extra decking? Did that wallpaper in the bedrooms and kitchen cost $1,300, or did that include the blinds? Other improvements include upgraded landscaping, more trees, shrubbery and flowers, a sprinkler system, fence and a unique mailbox up front. Now that you’ve itemized all of your improvements, you’re thinking, “How much is a new home like mine selling for now on the current market? Well, I’ll take what I paid and add in all of the above improvements, include appreciation for each year and that’s what I’ll ask for my price.”
Unfortunately, pricing your property in this manner may give it an inflated value. Your property that you’re so proud of and which is worth so much to you, may just sit with a “For Sale” sign for a long period of time, with a lot of lookers but no buyers. Then, by the time seven or eight months go by, you realize that your price is too high and drop it accordingly. But now the buyers that may have been interested have bought elsewhere, the agents stop bringing prospects, it has been on the market so long it has lost its appeal, there must be something wrong with it for it not to have sold by now. You then get to the point where you’re going to have to price it for less than it should sell for just to move it and get on with your life at your new location.
This can all be eliminated by logical thinking as opposed to emotional thinking. You’ve put blood, sweat and tears into your property. You’ve treated it with TLC (tender loving care) and it’s been great for you and your family. Logical thoughts include: 1) The benefits and pleasures your family has already derived from these improvements for which you will not recover full value. 2) Check out the properties presently on the market in your area that you’re going to compete with for sale, and their price. 3) Check the price of properties comparable to yours that sold within the last six months and determine how long they were on the market. 4) Remember, we may not have been enjoying the appreciation rate you expected over the entire period that you’ve owned the property.
This logical, statistical approach is used by appraisers and agents when arriving at a fair market value price for your home. Your agent should prepare the Competitive Market Analysis (CMA) using this logical approach. In doing so, you’ll receive a professional estimate of value to help price your property in a sale range that will best meet your overall objectives.