Three Mistakes Sellers Make When Estimating Their Home’s Value
Posted on March 5, 2017
Don inherited the family home when his dad died. His parents had lived in the home since the early 1960s and not much had changed. The Mad Men style was everywhere, from the nubby orange carpet to the wood-slated furniture.
Don called us because he wanted to list the home but not before making repairs and modernizing the house. He also told us he had a good idea of the home’s value based on his research and estimates.
When we met with Don, we saw that he had made some common mistakes when estimating his home’s value.
Mistake No. 1: Making Repairs That Don’t Have Good ROI
We have completed 23 professional remodels. We know, from experience, what repairs and remodels are worth the return on one’s investment (ROI) when selling a home.
For instance, interior painting is excellent ROI. A kitchen remodel is not.
After we edited Don’s list so that it only included only good ROI items, we then referred Don to Biehler’s Best Referral List for his repairs and remodels.
We’ve built this contractor resource list over our 25 years in business, and vetted the contractors. We also use them repeatedly with our own personal property remodels and repairs.
Mistake No. 2: Relying on Real Estate Databases and Government Information
Don checked Zillow, an online real estate database, to help him assess the value of his property. (Zillow’s quotes, derived from public and user-submitted data, use a proprietary algorithm, according to its website.)
But Zillow is not always accurate. In fact, we know first-hand that these estimates apply primarily to cookie cutter homes in the suburbs and not the market Don’s home was in.
Additionally, online real estate databases don’t reflect market and neighborhood changes that occur weekly, or larger economic factors that play into a property’s value.
Don also checked his home’s assessed property value, a value assigned by local or municipal governments for tax purposes. But this value is often below the actual market value, especially in a tight real estate market like Portland.
Mistake No. 3: Failing to Consider Often-Invisible Market Forces
Market value is what a willing buyer would pay for a property. Yes, it is derived from market research and analysis. But it is also an intuitive process.
Michael and I know what the market has done in the past. That history enables us, in many ways, to make some educated predictions about what the market will do in the future.
We are also privy to industry and market forecasts and insider shoptalk regularly. Place that information against a backdrop of past market patterns, and you start to see trends—in buyer patterns, neighborhoods and house styles—that rise and fall like each season’s fashions.
Additionally, we look at 1,000 homes a year. This immediate, feet-on-the-ground market research tells us what buyers want and don’t want in a property today, and the often-crazy motivations that drive their purchases.
Our Recommendation for Don’s Property Value
Retro is big right now, and with some strategy, Don’s 1960s home could be positioned at more than market value.
Make those changes, we told Don, and buyers would fall in love with the house immediately.
And love, as you know, can make you do silly things.
If you’d like a free, personal market analysis for your home, please let us know.
Photo Credit: ENTER TV-MADMEN 2 MCT by MCC Current is licensed under CC BY 2.0.
To protect our clients’ privacy, anecdotes are based on true stories; however, names and specifics have been changed and/or combined into composites.