I have been reading a lot lately from people talking about pricing. Homes are only less subjective than art and collectibles. What is the White House worth?
I got into an online discussion with an appraiser from the Southwest. He believed that only a licensed appraiser can determine the value of a home. Asking a Realtor®, in his opinion, was like asking your tax attorney to take care of your divorce. Sure. This from an industry that only needs three comparables to justify a price. And they need to start with a contract with a price on it before they will price a home.
So who can value your home? I would guess the profession that walks and talks with buyers everyday looking at homes and hearing their concerns. Maybe the profession that stands inside homes for more than 10 minutes. But still it isn’t that easy, I just think Realtors have a better insight into the actual market than an appriaser. We Realtors figure out prices while the appraisers job is to justify a price and that is much easier to do.
I had one listing that sat for 9 months and I know the final sales price messed up future appraisals, and here is why. The owners lived out of state but the mortgage wasn’t enough to hurt their finances. They did do some price drops but finally held tight on a price. I felt they should drop some more but they didn’t.
I would guess there were 30 showings on the property. Maybe 26 didn’t like the property. Two didn’t like the price. The last two wrote identical offers 3 weeks apart that was around $15,000 off list price. We were able to negotiate the price close to the listing price with the last buyer and it sold.
Let’s say the price was $300,000. In the tax record and RMLS it will say $300,000. Every agent and appraiser will compare that and other numbers to determine the price of another home. But is that really the value of the house? No, not if you are using it to determe other home’s prices.
We are essentially using subjective numbers to place an definitive value on another subjective item. Picasso’s prices don’t help my stick drawings on Ebay.
29 other people did not purchase that house but had an opportunity. Sure, some should be excluded because of the price drop but many could have. Just as they price art and collectibles, they are estimates. For an appraiser to say this is the absolute price, well that is wrong.
Days On The Market (DOM) helps a little to gauge overall interest but I don’t know if that is taken into account. I know of divorcing couples that have sold at very low prices and people who have sold to out of state buyers for high prices. DOM can be misleading as well. As I tell my sellers, you never know when the ONE buyer will come by.
The market will decide the ultimate price, no one else. The willing buyer who falls in love with the smallest detail of your home will buy your home over another. Agents usually give you a range, at least I do. Appraisers give a single dollar amount quite often based on just three comparable homes.