Since March usually represents the beginning of the “Spring Selling System”, I will tackle a topic that seems especially appropriate-how to properly price a home. Let me start by saying that it is about 75% facts and figures and 25% gut instinct. Put another way, ” 25% art and 75% science”. It is for that reason that all of the great internet webites that are out there can only give a ballpark as to the real value of a specific home when it is put on the market. Even with tract homes, where we literally have exactly the same square footage from one home to the next, there can be huge differences in ultimate sales price, both LOWER and HIGHER than what zillow or other sites suggest. Why is that? Let me give 2 examples to illustrate. A few years ago, I had a “Brighton Village” home in Valencia listed as a short sale. It was highly upgraded and the offer we had for $390,000 was higher than any other Brighton Village that had sold. The bank should have been thrilled with the offer price. To my surprise, they suggested that their valuation was $420,000. Now even if the buyer had been willing to pay that, it would never appraise for that. Shockingly, I found out that the $420,000 valuation came from a computer appraisal, something like zillow, which had used the homes, not in Brighton Village, but across the street in Cottage Hill and Country Gate. They have always sold for more because they are often on good sized lots and as anyone who knows Brighton Village can tell you, the lots there are a fraction of the size. Which illustrates the point, you have to see the homes and know the differences in value based on many factors, not the least of which is lot size. These “computer valuations” are becoming more and more common, so if you need an appraisal or simply want to know what is possible in selling, you MUST have an in person valuation.
Now I know you want the example of the home that is really worth much more than what zillow says, and this happens all the time too. I have mentioned in past posts examples of this, including the Stevenson Ranch home that I closed one month ago for $720,000 when zillow said $565000. That was an extreme example, but $20,000 or $30000 differences occur regularly too. A recent example is a home that I listed in Northbridge for $750,000. It is a complete remodel with pool at the end of a cul de sac. There are 2 offers on it, both in the 700’s. Zillow says $635,000. Why? Well, the science says, price per square foot, pool and not much more. Recent closing have been in far inferior condition, and “comp” this home out about $645000, best case. That is where the “art” comes in. How many homes like this are on the market (none), how desirable is this floorplan (very), how much does a pool add ? (a lot more than in most areas, Northbridge has many buyers with kids that want them). How much more will some buyers pay for a standard sale versus a distress property (I see typically 5-10%), how emotional is the home?(very), how desirable are the upgrades? With this home they chose all the right stuff, neutral and well put together. It is why home staging has become such a big business. So, to properly price homes a good agent has to know these things and a lot more. What are the trends in that neighborhood? What are the homes in escrow for? How many competitive listings are there?How many distress sales now and in the future? Where are the buyers right now? What is the likely buyer? Are prices stable? Still trending down? All of this plus the emotional appeal of the home have to be determined. Add this to the things that zillow cannot quantify-views, privacy, cleanliness, curb appeal, popularity of floorplan, usable lot size and upgrades and you can see why a computer valuation can never determine the real value of your home