is as difficult a task as what to name your first born. Seriously! As an active real estate agent in Union, Essex and Middlesex County, I meet people of all walks of life, with different educational levels and socioeconomic backgrounds and yet pricing a home to sell is one area where new and experienced home sellers alike stumble to make the “right” decision.
The reality is for as much information as I have access to, pricing a home to sell is not an exact science but it is based on some scientific data, data what can be analyzed and interpreted.
Here are three scenarios or situations where pricing a home to sell is difficult.
1. Residual Effect of a Not so Desirable Neighborhood
One of the ways that we, real estate agents and appraisers like, assess the value of a home is to look for comparable home sales within a 1 mile radius of the subject property. If this was true, the face value of the latter statement would look like the image to the right (Your house in the middle of of a circle). Unfortunately maps are not so neatly organized and years of buyer preference and some intangible perceptions could have influenced the value of your home. Imagine that you live on the outskirts of a really nice neighborhood and because of this, you believe that you should sell for top dollar. The problem with this type of thinking is buyers often don’t see it your way. They might in fact see that you home is too close to a neighborhood they would never want to walk in let alone live in. This is what I mean by the residual effect of a not so popular neighborhood.
2. Condition Red
Our state department uses colors in alert us as to the state of our security. Red = Highest Alert Level. Condition red in real estate has nothing to do with the state of a home but rather the costs associated to bring your home up to date or in most cases, condition red refers to the lack of equity in a home that would make a sale possible. Red can also refer to being in the red as in a business is in the red i.e. no profit, no money. Many homes on the market look like they were stuck in a worm-hole where they have not change in the past 30-60 years. You might recognize a home like this. Typically the home that hasn’t been updated since the 60s and boosts shaggy red, orange, green carpets or a home with dark wood paneling. YIKES! This reminds buyers of condition red. Upon walking into a home with these undesirable attributes, a buyer’s mental math calculator comes to life and the red line rises. Then, there are homes on the market today that have no equity or a low fair market value in comparison to what is owed on the property. These silent but deadly deal killers can force your home to sit and weigh heavily on a market, making it harder for you to sell. Sometimes, home buyers have way too many choices, which can lead to home buying paralysis. It would be healthier to have a normal supply a homes where it would take 5-6 months to sell. That’s only true in an ideal world.
3. Poor Design, Poor Layout or Upkeep
There are some homes that remind me and you of the past and they are sometimes charming. Then there are those homes that just don’t make functional sense in today’s modern world like the house with captive bedrooms where you have to walk through one bedroom to get to another. (I don’t know about you, but modern day kids are accustomed to space, I dare say they are spoiled with options. I am not saying that they are deserving of larger rooms, but unless you have children of the same sex, those adjourning bedrooms might be a cause of one too many arguments among your children conservatively). Or the home with a short basement. (I know people did not think about converting basements into livable space back in the day, but even I fantasied over a man cave if only to send my future hubby to the basement for a while to play his video games to provide me with some peace and quiet). Short basements, small closets, small rooms, oftentimes makes a home undesirable, which can affect your pricing.
Other Variables that Could Influence Your Home’s Value
- Crime or perception of crime
- School Reports
- Town or City’s Services Reputation
- Extra Charges Not Included in Taxes like Garbage collection fee.
- Interests Rates and availability of mortgage dollars
- The Media
- Property Taxes
- Direction Your Home Faces (North South East West).
- Accessibility of Your Home to Public Transportation
- Lack of staging
- Supply of Homes
- A home with a with out a view
- If the home is in a high rise, what floor (assuming levels are important if your market)
- Parking or no parking
- Attached, Detached or No Garage
- Accessibility of the property for showings (lock-box versus no lock-box – versus short notice versus 24 hours notice for showing appointments).
- Dinning Room or No Dinning Room
- Pool, No pool
- Yard Space
- Oil versus gas heating
- Lack of Separate Utilities for Multifamily Properties
- Upkeep/Maintenance of major systems
- A property with gated security versus no security
- Doorman versus no Doorman
- Lots of closet space versus little to no closet or storage space
- Number of bedrooms or even location of bathroom
- Flooring type
- Pet or Food Odor
- Full versus Partial, Finished versus Unfinished
- Time of Year
- Who’s in the White House
- High or low maintenance fees
- Club House or on-site amenities
Of the list of variables that could influence your home’s value, there are some things you can change and some things you can’t. Consult with a Realtor like me for a free market analysis of your home to find out what are some of your home’s selling points and what you should change, if anything. Its not enough to ask how’s the market anymore. What you should be asking is given my home’s condition, location and selling points, how much will my home sell for?