Sellers are hearing that prices are up and that there is limited inventory. This may be true in Bel-Air but it may not be true in Woodland Hills or Agoura Hills in the Los Angeles area. Therefore before you set the price for your home be aware of some of most common mistakes sellers make when they set unrealistic expectations for the sale price and market value.
Common Seller Mistakes:
One of the biggest pricing mistakes sellers make is to take a per square foot figure from another sale down the street and use that figure to price their property. Reality is there isn’t just one price per square foot figure that applies to every single property in a neighborhood. Keep in mind smaller homes tend to have a much higher price per square foot. It’s a matter of size, such as buying a small, medium, or large soft drink. The starting price may be a $1.59 for a small drink 12 oz. drink ($0.13 per oz.), and $2.29 for 24 oz. for the large ($0.95 per oz.) The price per ounce is larger for the smaller drink. My advice is to pay attention to price per square foot, but don’t forget to look at actual similar sales in the neighborhood, that have similar locations, gross living areas, views, and functionality.
Remember the difference between “comps” and sales: if your home is an orange, what have other oranges sold for in the neighborhood? Don’t price your orange according to what apples have sold for. Don’t consider sales for homes in gated neighborhoods against your home that is in a mountain area with narrow roads that is hard to get to because they are in the same zip code.
It is typical to think all sales are “comps”, but there is a difference between properties that are actually comparable and ones that are simply sales. It’s easy to get distracted by a few high sales in the neighborhood, but if they are nothing like your property, then don’t give them much weight and pay the most attention to homes that are actually similar to yours.
Also keep in mind, that seller can ask anything they want. Many realtors are willing to list a property for anything, therefore an informed seller should be pay more attention to sold properties than currently listed properties. In Calabasas, I have seen a home listed at $1,800,000 in the Classic area of Calabasas with 3400 sq. ft. on a large lot which sold for $1,610,000 after 331 days on the market. The owner was from outside the area. Homes less than a mile away with large lots sell for $1,800,000 to 2,200,000 all the time, however they are in an exclusive gated community not in the Calabasas Classics. If you are not realistic the market will let you know. If you choose to wait for the “one buyer who can afford to pay all cash.” Just know it can be a long wait, or better yet never materialize.
And lastly, if you have been doing your own construction and there are no permits, this may hamper your sale or your buyer’s appraisal and market value of the property. Adding rooms without permits can have an “unexpected” impact on an appraisal. If it is at all possible go get the building permit. If you can’t or are not willing to, be sure to disclose everything in your transfer disclosure paper work, and in the MLS.
Pamela Evans, MBA, Licensed Residential Appraiser, focuses on serving clients and for Estate Planning, Trust Appraisals, and General Evaluation aka Market Value Appraisals, Divorce Appraisal, Date of Death Appraisals, Probate Appraisals, Retrospective Appraisals and Mediation Appraisals.
Contact Information: Pamela Evans