With spring in the air, it probably won’t surprise you to hear that more people are putting their homes on the market. What may surprise you is that if a home is priced more than 10 percent above its value, it is likely to sell for less.
Confusing? Yes. Statistically true? Also yes.
Let’s say a property is worth $200,000. If it is listed for $210,000, it will likely sell for about $200,000. If it is listed at $225,000, it is likely to sell for closer to $190,000. My theory is this: if a realtor knows a property is overpriced, he or she is less likely to show it to prospective buyers. As it takes longer to sell the house, the perceived value drops. Add to that the time sellers lose marketing the property rather than living in their new home.
The best advice I can give is to hire a realtor you like and trust, and then listen to his or her pricing advice. Here are some of the factors that affect a property’s value the most.
- Location. Location, location, location. Location used to be more important than it is now. While it’s still a major component of value, our telecommuting world allows people more freedom regarding where to live.
- Size. Square footage is the single biggest factor in determining a property’s value. Be sure you know the square footage of the home. Measuring it is not always easy—even professionals make mistakes, so estimate it yourself to check the numbers.
- Land. How much property does the structure sit on? A big back yard can add a lot of value; however, sometimes the difference between 10 acres and 20 acres isn’t as important when it comes to overall impact.
- Condition. The condition of the property (both visible and invisible) is a major factor. Obvious signs of wear and tear are unappealing, but sometimes it is the structural issues that have a bigger influence on a property’s value.
- Décor. The style should not only be attractive, but appropriate to the home and the era. It helps to be internally consistent, as well as consistent with the neighborhood.
- Room Count. In addition to how many bedrooms and bathrooms, the total room count matters. These days, outdoor kitchens almost count as another room.
- Other Amenities. Pools, hot tubs, and some other amenities, while nice, do not increase the value by the amount it costs to install them. And they can detract if they are poorly placed or in disrepair.
- View. To let you know the value of a view, I once knew an apartment building owner who said, rent was $1000 and the view was an extra $200. Yes, people paid it.
- Community Amenities. If a property is close to good schools, parks, shopping, and other amenities, the value increases. Of course, these are subjective. For a retired couple without children, clearly the schools won’t be much of a draw.
- Financing. If the seller is willing to carry the loan, the value of a property may go up. No fuss, no muss (simpler loan application, no fees, easier all around).
When it comes to things you can change about your house to increase its value, the absolute best return on your time and money is to clean and de-clutter. Once that’s done, you can decide on additional improvements. When updating, go neutral. If you want a snazzy color, paint a wall. Paint is inexpensive to replace. Appliances and flooring are not. And do not over build for the neighborhood. If every other house on your street is a three-bedroom, two-bath home with 1800 square feet, yours should not be a five-bedroom, four-bath home with 3,500 square feet.
If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.