This is the 2nd in our three-part series called the Simple Truths of Real Estate. Just like in life, there are some things in real estate that are always true; no matter the geography or the market condition.
Truth #1: It doesn’t matter what the neighbors’ home sold for in the past
Home values are dynamic. They rise and fall with market conditions, just like a company stock on an exchange. What a house was worth five years ago, last month or even last week has no bearing on the value of a house today. This can be a difficult pill to swallow.
Truth #2: A home is worth what a ready, willing and able buyer will pay for it.
There are many sources that can provide an estimate of the value of your home:
1) various automated valuation prices from the national real estate sites or
2) have requested a home appraisal from a real estate appraiser or a
3) market assessment from a real estate agent
The truth is that all of these are estimates. If you ask 5 real estate agents for a valuation, chances are you will get 5 different prices. The same is you hire five separate appraisals or go on-line and request a valuation from five separate websites, chances are you are going to receive five separate valuations.
So What is the Truth?
In short, it doesn’t matter what the homeowners think their home is worth. And it certainly doesn’t matter what the agent or owner wishes the home was worth.
Automated valuations are fun to play with and are reasonable ways to look at pricing trends, but they should never be relied on to price a home (the AVM providers will even tell you this if you’ll listen to them).
What matters is what a buyer thinks it’s worth — and what a buyer will offer on a property. Also, if the buyer requires financing, whether a lender will approve a loan at that amount.
A Real-World Example
Listed a ranch home in Apex a few years ago in an established neighborhood. We received multiple offers, one of which being $13,000 above asking, all cash, no inspections, 7-day close. In this case, we had a buyer that was willing to pay considerably over asking to be in their desired neighborhood and home.
If you are thinking of selling, it is critical that you get multiple valuation estimates. Shop around. Meet with multiple agents that have successfully sold a home in your market. Ask how they determined the valuation and what steps they will follow to market your home to potential buyers.
About Log Pond Realty
Home is where your story begins. Home is where hopes and dreams are born, memories are made, and lives are lived. We would love the opportunity to assist you in writing your new story.
We service the Triangle region of North Carolina including Raleigh, Cary, Apex, Holly Springs, Morrisville, Fuquay-Varina, Durham, Chapel Hill, Wake Forest, and Garner.
Phone 919.589.3576 | Email at firstname.lastname@example.org