By Pablo Santibanez
When selling your home today and in this market, it is critical to price your home properly for a successful sale. Gone are the days when you could list your home at the top of the market, selling your home above what you listed at with multiple offers. When pricing your home for sale, this is not the time to “test” the market. Most of the people question is how to calculate sentimental value. The only thing that will be tested using this approach will be your patience.
It is vital to know the difference between market value and sentimental value before listing your home for sale.
Market value is the price that an interested, informed, but not desperate buyer would be willing to pay and an interested, informed, but not desperate seller would be willing to accept on the open market assuming a reasonable period of time for an agreement to arise.
Define sentimental values is the inflated opinion of the value of your home.
It is very hard to be objective about what to list your home because of your emotional attachment to it. Unfortunately many homes today are listed at sentimental value in valuation. This happens because many sellers list their homes based on what they want to hear rather than what they need to here. The difference for some agents can be the difference in getting your listing or not.
Unfortunately, these overpriced homes sit on the market for months. These longer marketing times negatively impact statistics making it appear that the market is slower than it truly is. A buyer in today’s market has time to compare competing homes and are in no hurry to buy. They may look at dozens of homes and become very aware of what is priced right and what is not. Now as your home sits on the market for months you soon realize that you need to lower your asking price. You lower it and a few misconceptions could arise as a result. 1) The perception could be that there must be something wrong with your home that it has not sold yet and now your lowering the price. 2) You lowered your price let’s wait it out to see if you continue to drop it lower.
Here is what could happen if you do sell your home at a sentimental value. The buyer’s lender will have your home appraised and it comes in at market value which is lower than the sentimental value of property you agreed upon. Two things could happen at this point 1) is the buyer will need to make up the difference from what the home is sold for and what the appraiser appraised it at. 2) The other possible scenario is the buyer could think that you tried to take advantage of him/her and walk away from the sale altogether.
Here are the benefits of having a pre-listing Appraisal completed by an Appraiser before listing with a real estate sales expert.
The Appraiser will measure your home verifying it with city records this reduces your liability and brings up any discrepancies which could negatively impact your home’s value.
This floor plan can be used like new home builders in marketing your home online and on flyers and other marketing material.
The Appraisal can point out needed repairs, and additions prior to listing the home The pre-listing appraisal can be used as a negotiating tool once you have a potential buyer. It gives you something concrete to show your buyer. It’s an independent third party opinion of your homes value, and not just your sentimental value.
Get an unbiased advisor to assist you in determining the market value of your home? Lenders throughout the nation hire and depend on Appraisers to estimate the market value of the homes they lend on for a reasonable upfront fee. This could be the single largest financial decision you make in your life. Get informed before selling your home. The pre-listing appraisal will help you to determine what to list your home for prior to listing with a local real estate sales specialist. In this market it is not an option anymore, but a necessity.
Pablo Santibanez is the owner/founder of Fast Appraisals 4 U a Real Estate Appraisal firm with 2 offices located in the cities of Los Angeles and Stevenson Ranch. His firm is rated AA with the better business bureau.
by Alan L. Olsen, CPA, MBA (tax)
Greenstein Rogoff Olsen & Co. LLP
The post Sentimental Value Vs. Market Value? Knowing The Difference Sells Homes first appeared on Advisors to the Ultra-Affluent – Groco.