I have found that is is fairly commonplace for "For Sale By Owner" houses to be priced higher than fair Market analysis indicates. There are several reasons for this:

1. Basing the asking price on what they want to get out of the house 

Example: The homeowners have a mortgage balance of $150,000 and have a second home equity loan for $25,000, for a total amount of $175,000. The problem is similar homes on the market are selling for around $160,000, but the homeowner is compelled to price the home at $175,000 because they need to pay off both mortgages. 

2. Basing the asking price on the cost they have in the house 

A classic mistake some homeowners make is OVER improving their home relative to the neighborhood. Most neighborhoods will have a price range. Knowing the property values in your neighborhood, including the high values, will help you make a smarter decision about how much to invest in the renovation so that when you go to sell you don’t have to price your home out of the market to pay for the improvements. Most home improvements do not return 100% of the cost of the improvement or upgrade. 

3. Basing the asking price on heresay or website "estimates"

A legitimate asking should be based on FACTUAL sold comparable information. The BEST source of accurate and local market information is the MLS - Multiple Listing Service. 

4. The Seller dosen't  compare apples to apples

The seller may  have gotten the sale price correct for John Smith’s home but does the seller know how his house compares to John Smith's?  If a seller wants "top dollar" for the home it better be in excellent condition and compare favorably on upgrades and amenities with houses that have recently sold in the area.

5. It is natural for a Seller to NOT be objective

It is only natural to think your house is as good or better than the house that sold down the street. If a seller is really interested in selling the house in a reasonable amount of time, getting a price opinion from a licensed Realtor or appraiser is a wise first step.

 

Bill Arey    Realtor

The Pat Wattam Team

ReMax First