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How to Determine your Asking Price

askphyllis real estate question

Ask Phyllis is a blog series of frequently asked real estate questions. Have a question about real estate? Please email us here.

Dear Phyllis,

Last year, thinking we were going to remain in our home for many years. We refinanced to combine our first and second loans and to take advantage of a lower interest rate. Our home was appraised at $950,000. Zillow says my home is worth $933,000.

I have an opportunity to move up north for a new job. The Realtor®, who sold us the home, told us we should list it for $869 000. Because we should sell between $850,000 to $900,000. Because we were given three different values, I am confused over the best way to arrive at our asking price.  Daniel

Dear Daniel,

Surprisingly pricing your home is one of a Realtor’s most difficult tasks. Proper pricing is more art than science; it requires your real estate agent to consider current market conditions. In both an escalating and declining market, recent sales are not as indicative of the current market. In an escalating market, it is critical that your Realtor® carefully examine similar homes which recently opened escrow. Homes that sold quickly likely sold at the asking price or above, while the homes that languished on the market likely sold under the list price. In a declining market, your agent should carefully examine active listings and those recently expired and canceled. What didn’t sell several months ago is not as telling as what didn’t sell last month and your current competition.

How not to Price your Home

Online estimates are fun and usually accurate within 15%’. The computer cannot take into account your home’s condition, updates, and locations of those recent similar sales. In addition, the computer can’t factor in a freeway close location. Or that your neighbor’s 20,000-square-foot lot was mainly hillside and not usable.

Assessor’s Value: Proposition 13 calls for taxes to be increased yearly based on the assessor’s minimal increase (not more) – not based on property appreciation. The assessor’s value has absolutely nothing to do with your home’s value.

Appraisal: Your home is worth what a buyer is willing to pay. An appraiser typically compares your home to similar homes sold in the last 3-6 months. The appraiser is looking backward in time, while your Realtor® will be looking forward to determining what a willing buyer will pay for your home today, not six months ago.

Your Realtor® should be able to provide the most accurate estimate of what a buyer would be willing to pay (your home’s value). If you doubt your agent, you can ask other real estate agents for a second opinion. Or you can share your concerns with your Realtor® and ask that she bring in a couple of other agents from her office, and you can also gather their opinions of value.

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