Finding Perspective: Pricing Your Home
Time and time again over the past year I have had conversations with clients and other Realtors about pricing a home properly. The consensus among Realtors in this market is that the prices are just not realistic and sellers are asking way too much, because they have lost perspective.
In a world where housing values increase by an average of 7% long term, it just doesn’t make sense to expect to sell a home at 150% above market value. In 2005, housing was out of control with unheard of gains. History can show that this is completely unnatural. History can also show that people tend to hold on to the idea that unnatural events become fixed patterns. This simply isn’t true.
In 2003, I purchased my home in the heart of Scottsdale for $115,000. In 2005, a neighbor purchased an identical unit for $319,000. That is a 177% gain. That is unheard of. Should I put my house on the market today, only 5 years later, I could expect, based on historical values, to command about $179,000, but I could probably get $219,000.
I consider a 7% return on my investment acceptable in many cases, and I can still sell at a higher gain than this. So why would I choose to sell my home at a price that the market cannot bear?
Is it greed? Are sellers still in denial? It’s time to come to terms with more realistic pricing. Understand that you have made tremendous gains in the value of your home, and if you choose to sell, consider yourself lucky to be able to leave with equity. Home values have not yet rebounded and the reason they haven’t is because pricing is outrageous. Lower your price, stimulate the economy, and the buyers will come out of the woodwork.
You’re going to make a huge profit as it is, unless you were one of the unfortunate who were taken advantage of by the mortgage industry.
Why put yourself and your Realtor through the wringer? Price your home appropriately to begin with and take a more modest return on your investment. There really is no other way to stimulate buyers, and that’s what we need.