Pricing Your House, Hitting The Sweet Spot
This is part three of a five part series on pricing your home and pitfalls to avoid.
A popular real estate website features an automated valuation model that is often inaccurate, yet is often believed to be a guide for the value of a particular home. Some people look at real estate assessments as a gauge of what a house may be worth. Both of these are dangerous sources of actual value. Unlike your potential buyers the automated valuations have not seen your house, and have no idea of the resale value of your home. In real estate, we have a saying “A house is worth what a ready, and able buyer is willing to pay.” Keep in mind that even though a buyer is willing to pay a given amount for a property, the lender will ultimately require an appraisal to substantiate the money they are willing to loan. For example, if a buyer contracts on a property for $200,000, and will be using an FHA loan which will finance 96.5% of the purchase price which in this situation is $193,000, but the appraisal comes in at $185,000 due to outdated features or deferred maintenance, the lender will only finance 96.5% of the appraised value.
So, don’t rely on automated valuations rather the advice of an agent familiar with homes in your area.