askphyllis real estate question, real estate q and A
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 appraised for $950,000. Zillow says my home is worth $933,000.
I have an opportunity to move north for a new job, and the Realtor who sold us the home told us we should list it for $869,000, and it should sell between $850,000 and $900,000. Because I have three different values, I am confused about 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; your real estate agent must 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 that recently opened escrow. Homes that sold quickly, likely sold at 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 cancelled. What sold several months ago and your current competition is not as telling as what didn’t last month.
How not to Price your Home:
Online estimates are fun and usually accurate within 15%. However, the computer is unable to take into account your home’s condition, updates, and location versus those of recent similar sales. It can’t factor in a freeway-close location or that your neighbor’s 20,000-square-foot lot was mostly hillside and not usable.
Assessor’s Value: Proposition 13 guarantees that property taxes be increased each year based on the assessor’s minimal increase (not more than 2% annually) – not based on property appreciation. The assessor’s value has nothing to do with your home’s value.
Appraisals: Your home is worth what a buyer is willing to pay. An appraiser compares your home to similar homes sold in the last 3-6 months. The appraiser is looking back in time, while your Realtor will look 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 another real estate agent 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 gather their opinions of value.
