Take The Highest And Lowest Numbers And Throw Them Out The Window
This week I met with a potential home seller who was interested in selling her condominium in Ellicott City, Maryland. She was very intelligent and well-read about her options of selling. She had done a good deal of research into the market and understood that, though it is an ideal time to buy, she would have to overcome losses when selling her current home.
Prior to our meeting I had completed research into the condominium market in her immediate area in Ellicott City so we could discuss her competition, her strategy and how pricing had fluctuated in her market. There were 8 properties in her condominium complex that were of similar size and features. Read on the find out why researching only a few of these properties could lead a seller to believe in an unrealistic sales price for his or her home.
This particular seller had contacted me with the intention of selling her home and buying a larger, single family home, also in Ellicott City. She had begun researching her own home online by using several IDX and home search websites. After conducting her research, she thought she had come to an accurate figure of what her home may sell for.
When we sat down to discuss numbers, she mentioned that she had seen another property in her building listed for $209,000. That competing unit had some updated features that hers did not, but she had also completed some valuable renovations that the competing property did not have. The variations in these upgrades essentially cancelled each other out. This seller was comfortable selling her condominium for $200,000, so she felt she had room to negotiate.
Unfortunately, as I showed her the prices of the other 7 competing units, and the prices of recently sold units, she realized that a more realistic sales price would be $180,000.
Similar units to hers were listed for sale between $180,000 and $190,000 with recent sales indicated $180,000 would be a fair sales price which would net a quick settlement.
The lesson here is that you cannot base an estimated value of a property on a single competing property. There are always those sellers who either unrealistically think their home is worth much more than it is currently worth, or desperate sellers who under-price their home to sell as quickly as possible.
Ideally, if there is enough surrounding competition, you should disregard the highest priced competitor and lowest priced competitor and focus on what the average sales prices in the area for similar homes are. This will give you a more accurate and realistic expectation of what your home may sell for in the current market.
Of course, having a real estate agent or appraiser assist with the process will greatly help your accuracy and understanding of your immediate market.