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I’M STILL AMAZED WHEN I speak with friends and neighbors who have no idea what their home is worth. They tell me they might sell in the near future. When I ask them how much they think they’ll get, they say something like, “I’m not sure, I’m meeting a real estate agent next week.”
Homeowners always need to know how much their home is worth. You can’t wait until your boss tells you about a great opportunity in Honolulu to start determining your home’s value. Like selecting an agent to sell your house, you need to plan ahead. Every home is bought to be sold.
If you don’t know how much your home is worth, how do you know your agent is listing it at the correct price? I don’t want to hear that you can just look at Zillow. Besides having to deal with the unfriendly layout and the slow loading pages, if you spend any time at all looking at Zillow, you’ll quickly realize that its Zestimate® isn’t worth Zit®, as it can easily be off by 25%. Many times, a listing will contain a Zestimate® history graph that looks like Elvis’s EKG.
The adage that “selling your home is the biggest financial transaction of your life” is as old as it is correct. And you’re going to trust an algorithm for guidance? I might trust one to find me a wife, but not when half-a-million smackers are on the line. By the way, where I live, after a home is sold, Zillow doesn’t even list the final sale price.
What’s a proud homeowner supposed to do? If it were me, I’d solve this problem the same way I solve every problem—with a spreadsheet.
In the first row, enter all the relevant real estate details: address, square feet, list price, sale price, date, bedrooms, bathrooms and so on. In the second row, enter the details of the home you purchased. Then ask the agent you used to buy your home to set up an automatic email to be sent to you every time there’s an MLS update for your neighborhood. As new homes in your area come on the market and get sold, update and analyze the spreadsheet accordingly.
You aren’t done yet. You need to attend the open houses for the above homes. I personally don’t see this as a chore, as I live in a condominium and am fascinated to see how other unit owners live. More important, it’s a way to determine how similar other condos are to mine. Do they have new Macassar Ebony hardwood floors, an updated kitchen with a Thermador dual fuel 48″ Pro Grand stainless steel range or a Pottery Barn Galvez 67″ clawfoot painted bathtub? It’s also a great way to get design ideas, contractor recommendations and meet the neighbors.
While you’re at the open house, chat with the listing agent. It’s a chance to put your finger on the pulse of the local market and shop for the seller’s agent you’ll eventually need.
You may think you’ll live in your home forever. Trust me, in all likelihood, you won’t. Remember, every home is bought to be sold.
Wow. I thought you were the Michael Flack who posted here that he did not have a permanent home and changed residential locations every couple of weeks – not a guy who posts every local MLS sales transaction in a spreadsheet.
Don’t confuse Michael Flack with Michael Perry!
https://humbledollar.com/2022/11/too-much-cash/
It’s this Michael Flack, but posted on his website: https://report44.wixsite.com/theafteractionreport/faqs
Mike Flack did spend a few years traveling the world, but he’s now joined the rest of us as a proud owner of a pile of bricks.
I would recommend that you act like you are going to list your home tomorrow. Compile a spreadsheet “handout” to keep on file. List all of your home improvements, costs, dates of work done, etc. When we sold our home of 30 years, I had a file crate of ALL paperwork for items purchased, warranty info, a spreadsheet with tax, utility costs, labeled keys. When we built our new retirement home I kept all records and have a detailed spreadsheet of all costs and sources for everything that went into the home. I have detailed notes for my son on what realtor to call, steps to take, if he ever has to manage our estate unexpectedly. Ditto for helping a surviving spouse!
Debbie Williams, that is a great idea. I keep a binder with all of our household receipts: HVAC, stove, and the like. With a separate binder for manuals.
I have to strongly second what Kristine said in her answer in slightly different terms.
Your house is worth what a buyer is willing to put on a certified check which they hand to you at closing. Until you leave the closing with that check in your hands, you do not know what the property is worth. What you are willing to accept is meaningless unless a buyer is willing to put that number on a certified check.
In selling one property a few years ago I had an agent show me numerous comps which determined that the property was worth 1.2 million. At the single open house I got 12 offers. One for less than the 1.2 asking, one for asking, and 10 above asking. All the offers that I entertained backed out for some reason. In one case, lawyers were reviewing contracts with an agreed price of 1.350 million when the buyer backed out. I took it off the market. What was my house worth at that point?
Months later the realtor brought me a couple who definitely wanted to buy my property for 1.5 million. Everything went swimmingly until we got to talking about a contract and ten percent down. Turns out they wanted to buy at some undetermined time in the future and wished that I would sign the contract without a down payment and hold the property until that undetermined time. What was my house worth then?
Finally, another realtor brought me a buyer who was offering 1.6 million. I was still off the market but willing to entertain the offer. It went through and eight months later I walked out of the closing with a check that reflected the 1.6 less all the various costs of closing.
The number on the certified check is all that matters. Everything else is speculation.
Mark Stracke, this article isn’t so much about the price you will accept – it’s about the list price. It appears you listed your home in accordance with the Realtor’s estimate. Was this a valid estimate? What was your estimate? You must know that your Realtor doesn’t have your best interests at heart.
So true! Because we had an all cash transaction, the closing process took just two weeks. But those two weeks were the longest. Of. My. Life. Once the money landed in my bank account, I could finally breathe again!
Your comment “Zillow doesn’t even list the final sale price.”
You may already know that the final contract price is often listed at the county tax appraiser or tax collecter’s website that is available to the public. That being said the contract price may not reflect adjustments on the seller’s actual closing statement, but the public contract price is usually a reasonable source to allow you to compare the listing price to the approximate sale price,
William Perry, that’s a very good point and useful when the MLS does not report a sale. I like the idea of the automated email alerting me to nearby listings – it’s a great reminder.
I carry my condo on my balance sheet at cost. It is 3.36% of my assets, so I’m not too worried about its value. It is a place to live, and nothing more.
Ormode, thanks for your feedback. I appreciate it’s brevity.
Your home is worth exactly what you are willing to accept from a buyer. Unless, of course, you are required to sell it for some reason. Then the market will dictate its worth.
The Drake, Your home is no different than a share of IBM. It is worth what the market will bear. Whether you want to sell or hold for a lifetime, it makes no difference.
Right now, real estate prices seem difficult to predict. I suspect this won’t be the case in a few months when the market (hopefully) stabilizes a little bit. The adage, “value is what people are willing to pay for it” seems appropriate in the recent real estate market.
We sold a home in March–at what appears (in hindsight) to have been the peak of the market. The house was very basic, quite small (1100 square feet) and needed a fair bit of updating. The ‘kitchen’ was about the size of a small walk-in closet and had the original 1980’s dark oak cabinetry.
Based on the market, and the neighborhood, statistics suggested it was worth no more than $500,000. Our real estate agent listed it at $475,000 hoping we might get two or more buyers into a bidding war.
The day after it was listed, a buyer came in offering $600,000 cash, waived all the inspections and allowed us to rent back the home for free for two months. The home needed a new roof, a new deck, a new furnace and a new water heater.
At the time, buyers seemed willing to pay whatever they needed to (within some reason) in order to get a house.
I still follow that market today even though we live a few states away now. It’s been fascinating to watch how quickly the ‘values’ of the homes changed. Just a few months after we sold, homes similar to ours are sitting on the market for weeks. Nearly all of them have seen multiple price reductions. Had we sold now, I suspect that $475,000 price would have been ‘correct’. I’m sure we would have been on the hook for covering some of the needed repairs as well.
If someone used historical data to try and value their current home, they would likely overestimate it. Trying to come up with valid values on housing right now seems almost like guessing.
Kristine Hayes, I appreciate your feedback, though disagree with the statement “Trying to come up with valid values on housing right now seems almost like guessing.”
Valuing your home may be difficult but it is not “like guessing.” While you may want to take a guess and list it at whatever your Realtor recommends, I will conduct some analysis and list it at the price I think is best.
Hey, it’s only money!
Wow, where do you live that an 1,100 sq ft house sells for $600,000?
Suburb of Portland, Oregon.
https://www.zillow.com/homedetails/6604-SW-Florence-Ln-Portland-OR-97223/48544415_zpid/?view=public
And I thought prices were high in Albemarle County, Virginia
https://www.zillow.com/homedetails/105-Woodhurst-Ct-Charlottesville-VA-22901/79023858_zpid/
Back in March, if that house was outside of Portland, it probably would have sold for $1.5 million.