Pricing Your Orange County Home: Where to Begin?
As a homeowner looking to sell, among your first questions should concern the list price. Unfortunately, this decision is anything but simple. Homeowners attempting to put a price-tag on their property are already at a distinct disadvantage.
For one, sellers are essentially as the mercy of the housing-market. In other words, the sellers don’t really set the price, the market—which is completely beyond their control—sets the price. Secondly, sellers are subject to evaluate their property based on their personal and sentimental ties to the home. This will undoubtedly inflate the listing price. So how can you arrive at a fair and attractive valuation?
This is the central question that’s plagued homeowners and real estate agents for decades. After all, a list price that’s too high might take months or years to sell. Conversely, a price too low and the homeowner may be taking a serious (and unnecessary) financial hit.
Conventional wisdom says to look at similar property sales and base your listing on their closing prices. However, today’s housing market in Eastside Central changes in both pricing and sales-volume on a month-to-month basis. With such a fast-shifting landscape, analytics—while critically important—can only help so much. While we may know that a sale of a similar property took place three months ago, values have likely changed since then; how do we compare this price to today's property value?
This may sound disheartening for sellers and agents (and prospective buyers, as well), but there are ways to help arrive at a satisfactory list price. Here are a few professional tips to help homeowners reach a reasonable price for their home:
The Data Doesn’t Lie:
While it’s true that market conditions can change essentially overnight, that doesn’t mean that market and real estate closing data is completely useless. In-fact, publicly available market data is among the most powerful resources for sellers. Irvine homeowners and real estate agents that closely monitor the market (and garner an understanding of local national trends) put themselves in a good position to maximize their sale. Of course, the prediction of market trends is only that: a prediction. However, with the abundance of data readily available to anybody with internet access, making an accurate, research-backed prediction of the optimal list price is more possible than ever.
Come to Grips With The Reality What You Initially Paid May Not Matter:
This is a tough realization for home sellers to make. Understandably so, some owners sell their homes for a small fraction of what they paid for it (and they may have even upgraded the property). Remember, sellers and agents are at the mercy of the housing-market and, in reality, markets fluctuate. While your home may have appreciated value, the value just as well could have depreciated—worst of all, these market factors are completely beyond the control of the homeowner.
Be Wary of Evaluating Additions and Improvements:
One would assume that a $20,000 rendition to their home will be paid back when they sell the property. This simply isn’t the case. According to the National Association of Realtors, the return on investment for home improvements strongly depends on the type of renovation. For instance, adding a built-in hot-tub will only return investment if prospective buyers are interested in (and willing to pay extra for) the addition. The bottom line: do your research to identify the upgrades that will maximize your return. Renovations that almost always receive 100% return include hardwood floor refurnishing and the addition of manufactured stone veneer.
Consider Abandoning the Asking Price Altogether:
Even with careful consideration of absolute values and market conditions, most asking prices are more aspirational than realistic. According to some real estate professionals, they simply don’t provide useful guidance as to proper pricing, and—if nothing else—present a cautionary tale in how inflated pricing can lead to months on the market. Instead, opt for a market price for the home.
As you may have noticed, the majority of tips here are “bad news” for sellers. In reality, local and national housing-markets fluctuate at such a rate that it’s difficult to keep-up with. After all, the value of your property is dictated by the market; it’s difficult for sellers to admit, but the original purchase price and any additions/renovations may be non-factors.
The silver lining in all of this is that you the home seller quickly become the home buyer once your home is under contract. Hopefully, you can take this new objectivity to the next phase of your move.
In these situations, a knowledgeable Orange County real estate agent may be of great assistance. Part of the agent’s job is to (gently) guide sellers to an acknowledgement of market realities, and in today’s environment that often means lowering their expectations.
On the bright-side however, simply having this knowledge is power in itself. Sellers that list their property without understanding these harsh realities tend to overprice their homes (and today’s well-informed buyers simply won’t overpay).