The most challenging decision every seller makes is where to price their home for sale. For over 26 years I have watched sellers use unique methodology for establishing this magic number. In 2010 I met with 357 new home sellers. It is very rare to meet anyone who knows how to play the price it right game and win. So for fun I thought I would share some of the games people play when it comes to pricing a home
Game #1 I Want What I Want
This mathematical game is where delusional home seller looks at how much they paid, everything they have spent on the home over the years, the sales commissions other cost associated with the sale, plus the profit they dream of making and that is their price. They will win the price is right game someday but, it could take 20 years
Game #2 I Want What I Need
Similar to “I want what I want” except this seller doesn’t look at past expenses they focus on real need. I owe x, it will cost me x to sell therefore x plus x is the price I need. This seems like a real deal until you realize the first x included a refinance or a home equity loan that was spent on credit cards, cars and beach houses.
Game #3 Two Wrongs Don’t Make a Right
The Tax assessor has valued my home at X so this is where I want to price my home. The tax assessor valued your real estate at a number to base a charge on. A tax charge to you. Not a credit. In 2010 the average sales price to tax value was 85%. Ask your tax assessor if he wants to buy your home at his price.
Game #4 I Like My House Better Than Your House
I like my kids better than your kids, I like my dog better than your dog, of course you like your house better than any other comparable properties! Duh! It’s your house- you should love it. But, you are not buying your are selling. The question is what does a buyer like better? The buyer doesn’t have your years of memories. They are comparing to commodities and they will not pay you more because you like yours more.
Game #5 Value-in-Use
I literally have people try to convince me that their house should be worth 10% more because they have more upgrades. 3 piece crown molding instead of 2, upgraded light fixtures, upgraded cabinet finish, painted garage, upgraded carpet and pad, larger deck, etc. Somehow they confuse what the builder personally charged them for upgrades as real value. They hope that expense financed over 30 years transfers as a credit on the sale and also appreciates in value. When you buy a new home the upgrades you add are double the real value cost. The builder is making a profit so you can have value-in-use. Those upgrades of yesterday may help your home sell today but, they rarely add anything extra to your bottom line.
Game #6 The Golden Palace
You can see this Raleigh area home seller a mile away because he is carrying a truck load of receipts to his listing appointment. Excel Spread sheets and files full of receipts from his overpriced purchases. He has added them all up and will let the buyer have everything at 50% off. 10 years ago when the house was built he put in a $5,000 dollar chandelier when most builders only gave $1,000 credit. The custom window treatments $15,000, landscaping over the years added up to $25,000 and his bath fixtures….gold plated. The window treatments are out of style, the chandelier is just plain ugly, the landscaping died and was replaced 2 times and gold plated…Are you kidding me? You will have to reduce your price 50% just to get the buyer to put up with your palace.
Game #7 Lady Luck is not so Lucky
So your roof leaked, air conditioning went stopped working along with the water heater, dishwasher and disposal. The kids and dogs trashed the carpet so you replaced it last year. The total expenses in the past couple of years was $22,000. Nope, you can’t list your house for $22,00 more than your neighbors who haven’t replaced anything. Yes, theoretically the buyer is getting a longer insurance policy against future expenses but, they will only pay a fraction for lady luck
Game #8 My Dad is Bigger than your Dad
We started playing this game at 5 and even at 55 we are tempted to play it again when it comes to Raleigh real estate. It goes like this…Yes but, my lot is bigger, yes but, I have more square feet. It is amazing to me how many people believe if one sold property had a lot size of a 1/2 acre and they have an one acre their house will sell for more. The size of your lot is not an indication of value. And, square feet, oh my, doesn’t this one cause controversy. All square feet is not equal. Let me repeat, all square feet is not equal. You will not get the same value for attic and basement as the first floor. You will not get the same value per square feet if the room counts are the same. You will not get value for wasted square feet. Tax value square feet is wrong 90% of the time. So many sellers try to price it right by calculating average price per square foot times their total square feet. This is a sure fire way to price it totally wrong
Game #9 Don’t Put Off Till Tomorrow What You Could Do Today
Many sellers spend money preparing their home to sell and they confuse the cost of deferred maintenance with added value. If your house needed to be painted 3 years ago but, you didn’t do it the fact that you are repairing wood rot and painting now is not to make is saleable is not an added value. It is neglected home maintenance that is desperately needed and if you do not do it now your house will sell for 3 to 4 times less the cost of the maintenance. Deferred maintenance cost cannot be added to your list price. The buyer is not going to pay your for maintenance that you should have done 3 years ago. Sorry
Game #10 The Price is Right
You will always know when the price is right because a buyer will appear. Finding the right price is not a game of luck, chance, or denial. It takes years of experience and the ability to remove emotion from the formulas and methodologies most sellers want to use. And, sometimes it takes bravery to hit sellers between the eyes with the truth. The buyer has always determined value. Yesterday I had a seller tell me her house was cuter than the other one in the neighborhood. It was the exact same floor plan and she wanted $25,000 more for her cute house. The only difference was the shutter color and her house was closer to a busy road but, she didn’t want to look at that. She was is Disneyland which is a fun place to visit but, you’re not going to buy it.
If you are thinking about selling your home now or in the future and want a REALTOR to hit you between the eyes with the truth about pricing it right please give me a call at 919.235.0007. I always say; “The truth will set you free but, first it hurts like crazy”. If you want your house sold, and not just listed, you need to hear the truth.