What Makes A House Overpriced?
In the past few months, I've had a number of conversations with sellers who simply do not seem to understand why their property is overpriced and what that REALLY means.
Let's say that we're trying to sell a house in a nice neighborhood where people have been remodeling and fixing up their homes for the past few years.
Our subject property, however, was last remodeled in 1975 and it looks like it.
Everything in the house works fine -- the baths are all A-OK, all the kitchen appliances are in top-notch condition for their age, and those window air conditioners cool things down just fine in the summer. I even like those little tiny 1-inch hexagonal white tiles on the bathroom floor.
As far as the seller is concerned, his house is just superb.
Problem is, buyers don't think the house is so superb.
Buyers want the latest and greatest as far as bathrooms, kitchens, central heating and AC goes, along with lots of other fancy doo-dads that add to the livability of the home. When those things are not there, buyers want to add them once they buy the place.
So, sellers need to remember that if a buyer is going to remodel the house after he buys it, he can't pay you top dollar for it. If he does, by the time he gets finished paying for all those doo-dads the house will be way overpriced for the neighborhood. In other words, if the house would be worth, say, $300,000 all fixed up, and it will cost $75,000 to pay for the remodeling, the buyer can only afford to pay you $225,000 for the house. And that is your top dollar.
I just love that word: doo-dads. I used it in an advertisement I wrote about 30 years ago and haven't used it since. Neat word, don't you think?
Anyway, a property that is suffering from, well, let's call it benign neglect, is not going to sell for top dollar even though the seller wants it to. Not gonna happen. Sellers need to look at their property with a realistic idea as to its true value today and not compare it with other houses that have added all the doo-dads. Those houses are not comparable. To be honest, real estate agents make the same mistake sometimes when doing CMA's -- and agents should know better.
Realistic pricing will get houses sold even in today's market.
Happy Selling!
-30-
Let's say that we're trying to sell a house in a nice neighborhood where people have been remodeling and fixing up their homes for the past few years.
Our subject property, however, was last remodeled in 1975 and it looks like it.
Everything in the house works fine -- the baths are all A-OK, all the kitchen appliances are in top-notch condition for their age, and those window air conditioners cool things down just fine in the summer. I even like those little tiny 1-inch hexagonal white tiles on the bathroom floor.
As far as the seller is concerned, his house is just superb.
Problem is, buyers don't think the house is so superb.
Buyers want the latest and greatest as far as bathrooms, kitchens, central heating and AC goes, along with lots of other fancy doo-dads that add to the livability of the home. When those things are not there, buyers want to add them once they buy the place.
So, sellers need to remember that if a buyer is going to remodel the house after he buys it, he can't pay you top dollar for it. If he does, by the time he gets finished paying for all those doo-dads the house will be way overpriced for the neighborhood. In other words, if the house would be worth, say, $300,000 all fixed up, and it will cost $75,000 to pay for the remodeling, the buyer can only afford to pay you $225,000 for the house. And that is your top dollar.
I just love that word: doo-dads. I used it in an advertisement I wrote about 30 years ago and haven't used it since. Neat word, don't you think?
Anyway, a property that is suffering from, well, let's call it benign neglect, is not going to sell for top dollar even though the seller wants it to. Not gonna happen. Sellers need to look at their property with a realistic idea as to its true value today and not compare it with other houses that have added all the doo-dads. Those houses are not comparable. To be honest, real estate agents make the same mistake sometimes when doing CMA's -- and agents should know better.
Realistic pricing will get houses sold even in today's market.
Happy Selling!
-30-
posted by Terry Ward at 8:06 AM
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