Do sellers expect too much?
Along with the weather, the real estate market appears to be cooling a bit. After a brisk spring and summer market, sellers set and achieved high expectations from their properties. It may be time to re-evaluate those expectations if your property has been on the market a while. Before the market crash we used to anticipate a 4-6 percent average annual appreciation. Given the high prices paid by may in 2007 that expectation is unrealistic even in today’s market. Although a majority of the buyers from that time have recovered they may not be able to sell at a profit even today.
The National Association of Realtors estimates home prices will increase 5 percent by the end of this year. Even so, 23 markets have seen the cost of single-family homes decrease in recent months, NAR reports. Sellers’ return greatly depends on their location and how much they paid for the home when they purchased it. Pricing a home on the low end can actually pay off says NAR. Low-priced homes tend to prompt greater interest among buyers. That could result in a bidding war, which could increase the home’s price way past the listing price. In August we watched a home priced at $290,000 sell for $310,000. The winning bid came in just 12 hours after the home was published in the Multiple Listing Service.
Some sellers like to add their remodeling costs to the value of the home. Just because you completed a renovation of your kitchen or outdoor deck does not mean you can recoup every dime of that investment at resale. Some renovations may help you to increase your home’s value. Sellers, however, rarely will recoup the entire cost from a renovation. Sellers, on average, see a 64 percent return on every dollar they spend on home improvements, according to realtor.com. But the profit can drastically vary by the type of remodeling project. To find out what items pay off go to realtor.com and look for their renovation cost vs. benefit link.
Things that will give a return are things that don’t become dated, like additional insulation, according to “Remodeling” magazine. They report an average of 107 percent return on the cost of the project which for most houses is relatively inexpensive. They also place a high value on a new insulated steel front door which is not likely to date your home and may provide energy savings as well. Still, you will only recover about 90 percent of the cost of the door the magazine states.
Some sellers’ strategy is to price the home high to “see if anyone bites.” Overpricing your home isn’t easily fixed just by lowering it later on. The reason: Homes that have lingered on the market for months — or that have undergone one or more price reductions — make buyers presume that something must be wrong with it. Once a property has become market-worn, price reductions can actually work against you later. Your Realtor has the tools to evaluate your micro-market and tell you what to expect to get. Don’t insist on a higher price if you really want to sell.
Trust an expert … call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.
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Kim Cooper is a real estate Broker and the spokesman for the Coeur d’Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d’Alene Association of Realtors, 409 W. Neider, Coeur d’Alene, ID 83815 or by calling (208) 667-0664