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Factors to Ignore
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Some sellers have misconceptions about where to start estimating value. Here are factors to ignore.
Your cost. Suppose you received your house as a gift; must you then give it away?
Your investment in improvements. You put in that purple kitchen because you enjoyed it, but you are not likely to find a buyer who feels that the house is worth $15,000 more because of it. Certain potential buyers may even calculate the cost of tearing it out and replacing it with something in green.
Reproduction cost. The money it would take to duplicate your house, building it from scratch, is its reproduction cost. Reproduction cost is usually estimated for property insurance purposes, but it is of little value in setting a sales price except for a newly built house. If the home you are selling is only a few years old, however, it may be wise to take a tip from what other new homes may be selling for in the area if they were outfitted and improved the way yours has been.
Assessed value. This figure, the result of a specific type of appraisal, is set by the taxing authorities as a basis for levying property taxes. No matter how often assessments are reviewed, and how sincere an effort is made to keep them in line with market value, assessed value is seldom a dependable guide.
Your needs. Also irrelevant to the proper asking price for your property is the amount of money you must take out of it. You may require $70,000 net in order to buy your next home. That fact may influence your decision to sell or not to sell—you cannot move unless you have the $70,000—but it is not the basis for pricing your present home.
Your problems are not the buyer’s concern. The public is looking at various houses and comparing prices. Supply and demand, operating in the open market, will set the value for your house. Your home can be priced properly only if it is considered in competition with other property.
Emotion. You cannot charge for sentiment, for the fact that your daughter took her first steps on the patio and your son had a clubhouse behind the garage. Your emotions can lead to serious mistakes in setting the asking price.
In the case of divorce, for example, emotions can wreak havoc with price. If one party is impatient to leave town, and the other isn’t getting the money anyway, a buyer is likely to pick up a bargain.
Dramatic family changes may produce sellers who just want to turn their backs on the whole situation. Still, you should aim for a sale at fair market value, without letting emotions influence your listing price. |
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