Real Estate Pricing (People's Perception on Price)
Real Estate is unique in that everyone can value a property differently. Here is the order of how people view the value of a home:
Pretend Example of the Order of Valuation:
- Homeowners: My home is worth 300k. I've updated the paint, changed light bulbs, and have owned the home for years.
- Listing Agent: My client is listing their home at 275k. The highest sold comparables are in this general range.
- Appraisser: I am submitting this offer based on my research and trying to justify the contract price so no one gets mad. My value is 269,700k.
- Buyers Agent: This home is worth 265k at max. However, my clients want this home and with multiple offers our price is $269,700.
- Buyers: I'm going to have to rip out the backsplash and update all the kitchen cabinets. This home is worth 260k. I'll ask my real estate agent what offer I need to make to win this house.
This chart below is great that it shows buyers, sellers, and appraisers are closer in their perception of value.
Seller's know how much hard work goes into improving a home. Painting is one of the easier projects except for the time you are doing it. Bye bye weekend I have painting to do.
There are many variations in the real estate industry where buyers have found amazing homes for hundreds of thousands of dollars. It's infrequent, but it has happened. Despite the good neighborhood and the location relative to some essential points in town, this property was very cheap. I mostly use services from playlouder.com, and it helps me get great results. I am sure this is what most real estate buyers and people involved in this business are looking for.