Mistake #7

Mistake Number Seven

Most Homeowners Have An Inflated View Of Their House’s Market Value: How much do you think your house is worth? Is that based on: a) what you paid for it; b) what you owe on the mortgage; c) how much you’ve put into improvements; d) how much the neighbors house just sold for; d) you had an appraisal recently? All of these factors tend to influence what homeowners “think” their house is worth, but the only number that matters is what a qualified buyer would offer to pay for your house, today. The best way to predict this, is to check recent, sale comps. By “recent”, I mean within the last 90 days. And by “comps” I mean you only look at houses within close geographic proximity to your house, that are of similar size, quality, and condition.

A word about appraisals…if you recently “refinanced” your mortgage, or took out money on a HELOC, the bank probably did an appraisal. You need to know that most “refi” appraisals typically performed over the last few years were inflated so that homeowners could take out the maximum equity. So don’t be surprised when you find the market value of your house is not the same as what the appraiser told you 6 months ago.

Homeowners often have an inflated view of their house’s market value from being too narrowly focused on what’s going on just in their immediate neighborhood. How much the neighbors down the street sold their house for is important, but it’s not the only factor. If another neighbor, (maybe not on your street, but still in the same “market”) recently “got behind” on their mortgage payments and had to sell below market value…guess what? That affects YOUR market value!

I know this can be a rude awakening, but with foreclosures being at an all-time high, homebuyers currently have a lot more houses to choose from. You need to realize that these houses are your competition and if you truly want to sell your house now in the current market condition, you will need to set your asking price accordingly.