How much is your house really worth?
You guys, I love talking about things that I feel like I shouldn't talk about. When you feel like something is off limits for any reason, there's usually just a lot of energy around it.
Of course, there's a lot of energy around selling your house! For some reason, I feel like no one talks a lot about pricing and what your house is worth, but I'm not really sure why.
There are a lot of discussions about the importance of pricing your property right when you sell, but how do we get to that number? When should you even start thinking about this? Who's right? Why shouldn't you just list it high and see what happens? Other than that fateful listing meeting where you walk us through your house and then turn blue in the face, holding your breath until you hear back from us with what we think we can sell your house for... there's not a lot of communication. But that shouldn't be the case! So what is your house worth, what info matters, and what's the market really like?
First, did you know that there is more than one way to value a house?
There are a couple of different values, and if you think they should all be the same, you are wrong, my friend. When talking to clients about selling their house, sometimes they will mention that their assessed value is X, and they expect that we will be listing it somewhere around that price. But really, your assessed value is just a number that is determined by your city or county that is used to calculate your property taxes. It actually has nothing to do with what your property will sell for. In reality, you want this number to be as low as possible, and if it's higher than what you could actually sell your house for, something is wrong! We always advocate that clients appeal their property taxes {and hence the assessed value} every time properties are re-assessed. In Chicago, this happens every three years. Don't give the taxman more than you have to!
The market value is what matters ~ what will your house sell for on the market right now. The only person who can really give you this information is a real estate broker. When you get your house appraised {during a sale or for a refinance}, you should also be getting the market value from the appraiser, but maybe I'll break down info on appraisals more another day. We will walk through your house, get an understanding of the space and find out what work you've done, etc. Then we'll look at what else has sold in the past year {maybe a little bit more or less depending on the situation} that is similar, look at other trends like market time etc., and we'll be able to tell you what your house should sell for. A good agent can hone in on this number almost exactly. But what about...{insert 1000 reasons you think we might be wrong}?! Sometimes, people are surprised by the information we give them. Sometimes it's a good surprise, and sometimes it's a... not so good surprise. I never ask what people want to sell their house for because it doesn't matter. It doesn't matter what you bought it for, and it doesn't matter how much money you spent on improvements. The value is what you can sell your house for now, in the current market ~ period. We had buyers find a cute house earlier this year, and the seller told us that they bought it for X and spent X on improvements, so that's how they decided on their price, and that's why she wasn't open to negotiating. So cute. Not relevant.
Many people mention their 'Zestimate' is, especially if it's a very different number from what we tell them, so what's going on there? You guys, I hate Zillow, and I hate their Zestimate, and so does every other agent out there. It is never right, and it causes so much agony! This post is getting a bit long, so I'll have to delve more into this another time. Still, the moral of this story is that there is no algorithm that can magically know what your house is worth without ever having been inside it, or any others in the area. Don't trust this number. Actually, just stop going there; no more Zillow! It's a recipe for disappointment. I promise.
My favorite phenomenon in real estate is when someone wants to just 'price it high and see what happens'. I'll tell you what will happen ~ nothing. And then you'll go through a lot of frustration and disappointment for a loooong time until you finally get to the appropriate price and end up finally selling. It's so weird {and simultaneously fascinating} to me that some people behave completely the opposite of how they ever would regarding anything else when it comes to selling their house. Would you ever walk into a car dealership and go straight to a car that had a sticker on it for $40K over what you know it's worth and gleefully ask for a test drive? Nope. You would make a big judgment face and walk right by, laughing at whoever thought they would get that much. But we've got all this energy in our house so sometimes people go a little crazy. Don't be crazy. So when should you even bother finding out what your house is worth and what you can sell it for? It's smart to get an idea of this number before you're ready to pull the trigger and put it on the market. Just like it's smart to start prepping your space early. This way, you're not caught off guard, you're not rushed, and you can set yourself up for success! When you find yourself starting to think about your next house, it's time to get an idea of what your current house is worth... even if you think it still might be a year away... just get an idea {not from Zillow!}, so that you know where to set your expectations. Not only will it let you get a clear idea of what the value of your space is now, but it will also give you an opportunity to talk about potential improvements you might be able to make to add value and whether they make sense.
It's always tough when you end up in a situation where you either made improvements that didn't add any value {or made things worse}, or you could have done some easy projects but missed the opportunity. Don't let that be you!
If you feel totally lost about what your place is worth or feel like there's a huge gap between what several agents are telling you and don't know how to wade through everything, feel free to send me a note with any questions you have!