Ask Phyllis: a blog series of frequently asked real estate questions. Email us here
Determining your asking price
Dear Phyllis,
Last year, thinking we were going to remain in our home for many years, we refinanced. We combined our first and second loans and to take advantage of a lower interest rate. Our home appraised for $950,000. Zillow says my home is worth $933,000.
I have an opportunity to move up north for a new job and the Realtor® who sold us the home told us we should list it for $869,000 and it should sell between $850,000 to $900,000. Because I have three different values, I am confused over what’s the best way to determine our asking price? Daniel
Dear Daniel,
Surprisingly determining your asking price is one of one of a Realtors® most difficult tasks. Proper pricing is more art than science. When determining your asking price it requires that your real estate agent take into account current market conditions. In both an escalating and declining market, recent sales are not as indicative of the current market. In an escalating market it is critical that your Realtor® carefully examine similar homes which recently opened escrow. Homes which sold quickly, likely sold at asking price or above, while the homes that languished on the market likely sold under the list price. In a declining market your agent should carefully examine active listings and those recently expired and cancelled. What sold several months ago is not as telling as what didn’t sell last month and your current competition.
How not to Price your Home
Online estimates are fun and usually accurate within 15%. The computer is unable to take into account your home’s condition, updates and location versus those of recent similar sales. The computer can’t factor in a freeway close location or that your neighbors 20,000 square foot lot was mostly hillside and not usable.
Assessor’s Value: Proposition 13 guarantees that property taxes be increased each year based on the assessor’s minimal increase (not more than 2% annually) – not based on property appreciation. The assessor’s value has absolutely nothing to do with your home’s value.
Appraisals: Your home is worth what a buyer is willing to pay. An appraiser typically compares your home to similar homes which sold in the last 3-6 months. The appraiser is looking backward in time, while your Realtor® will be looking forward to determine what a willing buyer will pay for your home today, not six months ago.
Your Realtor® should be able to provide the most accurate estimate of what a buyer would be willing to pay (your home’s value). If you doubt your agent, you can ask another real estate agent for a second opinion. Or you can share your concerns with your Realtor and ask that she bring in a couple of other agents from her office and you can gather their opinions of value as well.
Related Post: Pricing your Los Angeles home to sell
