During the past decade we’ve seen a lot of fluctuation in the market for home prices in Southern California, and all across the United States. Between the rising demand for real estate, and the financial crisis of 2008, we’ve seen a lot of changes. As a result of this, pricing a home correctly can be very difficult for a lot of realtors. I mean I am often asked the value of a home and sometimes even I am stumped. What is a home worth?
Whatever a buyer is willing to pay!
One of the most important aspects of working with clients is getting the pricing correct. We all know that when the realtor and the client see eye to eye it makes it very easy to get the home priced correctly, and makes for a speedier sale. And who doesn’t love that?
However, one of the things that happens a lot in the real estate world, is that a client will overprice their home, which can be disastrous. They think they can always reduce it later but they can never go up in price. This is correct in theory, but this is SO, SO, SO, WRONG!
I always assure my clients that I am going to be brutally honest and price the home right the first time from the get-go. While other agents may nod their head and agree with an inflated price just to get the listing--I always turn down clients who aren’t willing to price correctly. Because I know that it won’t work out well for that prospective client. And so what if another broker gets the listing? The seller will soon realize the home is overpriced anyway.
I would rather walk away from a potential deal, than price incorrectly and have to watch as the home price (as well as my client and my relationship) deflate.
Instead, I’ve come up with a formula for how I accurately price homes the first time, so that my clients are always happy from the . While no one is perfect, this process is the easiest way to make sure that price is easily configured and will get the home sold as quickly as humanly possible.
Square Footage and Building Type vs. Land Price
One of the first things that I look for when pricing properties is the size of the home is the location and size of the property.
A very expensive condominium or apartment will be worth much less in the long run than a smaller home with amenities. The reason being that with a home you own the land, whereas with a condominium property you do not. And the land
is what appreciates over time. Not
It’s very important that sellers recognize that the structure that makes up a home is not as important as the land it sits on. The land, especially in markets such as Southern California, is what is worth the most money.
Next, I look at the square footage and see how the house compares to other homes in the same neighborhood. This is important because it really is a major driving factor in the final price of the house. Everyone wants to get as many square feet for their money as possible.
Location, Location, Location!
Next, I look at where the house is located. For a home in Beverly Hills is going to sell for a lot more than a home in the Valley. Zip codes can be trendy, so it is important to have your finger on the pulse of the current and to know not only which neighborhoods are hot, but which types of properties within those neighborhoods are selling well.
I always advise my clients to pay for a better location, because in a decade or more it will be worth more than what they paid for it to begin with.
Luxury amenities are either hit or miss for most properties. While some homes are updated with the latest and greatest, it’s important to remember that the technology will probably be outdated in as little as five years. So most of the homes that I sell may not have amenities that factor in. These types of renovations can play a big factor in the final price of a home.
Renovations (Future Proofing Your Home)
Last but certainly not least, is the concept of future proofing
your home. This is where the client spends money to upgrade the home to the current trends in things like security systems, smart appliances, and even saunas, wine cellars, and other amenities.
I advise my clients to go big on or leave it alone.
No one cares about spending $30,000 to redo your master bathroom--it’s not that important. However, if you focus on the major rooms such as the master bedroom, the kitchen, and the living room--you can certainly increase your home valuation and get your money back many times over. however I say do everything
or don’t do anything at all!
More often though, the interior design itself (when done correctly) can add immense value to the price of the property. Luckily, I studied interior design and know a thing or two about what pops and what flops.
Good interior design can make new owners feel like they’ve just entered into their dream house, whereas outdated tiles, counters, and other amenities can make the house seem like it’s overpriced.
What’s Your Home Worth?
Hopefully this blog has helped you to think about how your home measures up to the current market. Of course, I’d love to help you find out exactly how much
your home is worth, and give you the fairest assessment of what you can realistically expect when you are ready to sell.
Even if you aren’t ready to sell today, it’s always good to have a general idea, so that it can help inform your decision making in the future.
And even if you are looking to buy right now, this post can help you to look at the different aspects that you should consider when making a wise financial investment so that your new home can retain its value, or ideally, be worth more than what you paid for it.
If you have questions about what your home is worth, schedule an appointment with me today. Call (310) 623-8703 or simply send me an email [email protected]