When you are selling a home in California there are many things you can do right and others you can do wrong. One of the first questions we are often asked is how to price a home in California. This is not a simple process for a person who does not have a real estate background. The truth is that the best way to properly price your home is to contact Berkshire Hathaway HomeServices California Properties and let us help you. Otherwise, read on to learn about seven of the most common home pricing mistakes.
- Basing your price on a home that hasn’t sold
- Only looking at historical sales
- Overvaluing improvements
- Assuming you will get full value for maintenance expenses
- Taking need into consideration
- Using generic online tools to set a price
- Not being willing to make adjustments
It is common for people to look up other homes in their area and base their price on that. Note that this can be a huge mistake because these houses have not yet sold. A person can list a home at any price they would like – that does not mean that they have priced it to sell. You want to look at homes that have sold so that you know what buyers are actually willing to pay – not what sellers wish they would pay.
Yes, you want to look at homes that have sold but that’s not all you want to look at. Especially in California, the market changes very quickly. Do not price your luxury home based on how much similar homes were selling for two years ago.
The fact that you put a certain amount of money into an improvement does not mean that you can expect to get that exact amount out of it when you sell your home. In some cases, depending on the supposed improvement, it could result in a net loss on the price of your home.
Let’s say you spent $35,000 on your roof and $30,000 replacing your home’s sewer line. You should get that back in the price you sell your home for, right? Sometimes – but most of the time you will not. Generally speaking, maintenance items are not going to yield any return on your investment.
The bottom line is that the market does not know or care how much net equity you need to purchase your next home. This cannot be taken into consideration when pricing your home.
There are many general real estate sites that offer estimates of every home’s value. The fact of the matter is that it does not know everything about your home and it does not take all the factors into consideration.
If you list your home at one price and then suddenly half a dozen other properties pop up for sale in your area, then you can expect that your price is either going to need to go down or you are going to have to wait to sell until there is more of a scarcity of available properties.