The Pricing Traps When Deciding to Sell #realestate #homeowner #investment

Source:  HouseLogic, Jaime Wiebe

It's easy for homeowners to stumble into two common traps:

Conflating actual value with sentimental value:  how much they assume their home's worth because they lived there and loved the time they spent there.

Assuming renovations should result in a dollar-for-dollar increase in the selling price -- or more.
- "Many homeowners think, 'Of course my home is worth a bazillion dollars," says Newgent.  If they put in a few thousand dollars worth of new flooring, for example, they might overestimate the upgrade's impact on the home's value into the tens of thousands.

Talmadge's Texas home came with a built-in renovation trap:  It was already the nicest home in the area, making it harder to sell.  Major additions had inflated the square footage -- and the price, according to one appraiser -- without accounting for the surrounding neighborhood.  That created a disconnect for buyers:  Wealthier ones who might be interested in the upgraded home disliked the neighborhood, and less affluent buyers couldn't afford the asking price.

"Don't buy the nicest home on the block" is common real estate advice for this reason.
That's not to say that renovations aren't worth it.  You want to enjoy your home while you're in it, right?  Smart renovations make your home more comfortable and functional but should typically reflect the neighborhood.  A REALTOR can help you understand what certain upgrades can recoup when you sell and which appeal to buyers.

Another culprit for many incorrectly priced homes is online tools, like Zillow's "Zestimate," that prescribe an estimated market value based on local data.
The estimate is often wildly inaccurate.  A Virginia-area real estate company, McEnearney & Associates, has compared actual sold prices with predicted online estimates for several hundred homes in the area for the past few years and concluded the predictions failed half of the time.

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