Value in the Eyes of the Beholder
Parting with a home can be an emotional experience that brings a lot of old thoughts and memories no matter if you lived there for a few months or a few years. As families get bigger, out-growing an old home is very common and we all know that when you have raised children in a home, there is an additional emotional attachment to the home.
Unfortunately, the real estate market does not a premium on these kinds of emotions and it can often be difficult for a home-seller to accept what the market price of a home truly is. Market price is driven by the consumers in the real estate market and nothing more. Any product is worth only what someone will pay for it, not what a seller feels entitled to.
In real estate transactions, putting a sticker price on a home is one of the first things that can get a realtor-home seller relationship off on a bad foot, especially if renovations have taken place on a property. The harsh reality is that a $50,000 finished basement does not always add $50,000 of value to the market price of a property. It can be easy to look at a home improvement project and say that the original price of the house plus the cost of any renovations should equal the new selling price of the home.
That is not always the case as there are a slew of other factors that influence home price such as the area the home is in, the general state of the real estate market in that area, the school district the home sits in and a whole multitude of factors that push home buyers to and from particular areas and types of homes.
Homes are generally valued based on the sales of other similar homes in the surrounding area. While on the surface that can seem a little unfair, using someone else's home that you've never been in and no nothing about as the basis for your own well-kept house that you feel a great emotional bond to. However, it is the only way to get a real gauge of the way the market is reacting to the area surrounding your home and to homes of a similar size and amenity makeup.
Your realtor will do this calculation with you and share the results. If it is a figure that you were not expecting or do not feel comfortable with, ask questions. Realtors are legally required to be able to support any price they put on a particular home, so they will have the data already pulled to share with you. If you push, some realtors may list your price above what the market will pay, but be prepared to wait until you make a price drop to see any real activity on the property.
Home buyers have the same kind of information at their finger tips and, if their realtor has done the proper homework, know just what to pay for a particular home. Correct pricing is one of the key factors in driving activity to your property, so take that into account if you feel initial resistance to the sale price your realtor suggests. Hitting the right sale price with your real estate transaction can be the difference between selling your home in a matter of days and selling your home in a matter of months.
No matter your emotional attachment to your home, be prepared to be analytical and objective when it comes to actually putting a price on the place you've lived, no matter how long you've lived there. While it can sometimes be difficult to see renovations and home improvement costs not translate exactly into sales price dollars, know that there will always be factors out of your control influencing the final sales price of a home. Focus instead on making sure you have the smoothest real estate transaction possible, setting you up to make new memories in your perfect new home.