BAD MATH
By Robin Shapiro
I have come across a few sellers who have grossly inaccurate views regarding the values of their homes. They think that just because they paid “X” and put “Y” into the property (or, alternatively maybe they have debts of “Y”), that the property is now worth “X + Y.” This concept works in algebra, but not in our real estate market. Inaccurate views by sellers most often occur at the beginning of the sale process. The sellers may not yet realize the tremendous amount of setup work done by the broker on other properties which helps to find potential buyers.
The value of a home in today’s market is determined by comparable sales within a recent time frame (3 to 6 months). Even if an uninformed buyer appears who would pay too much, there is an excellent chance that the deal wouldn’t close. Why? Any buyer who needs a mortgage would find that the bank appraisal would be too low to justify the size of the mortgage needed to complete the deal.
Some buyers are too ready to take these pie-in-the-sky listings because they are hungry for new inventory (shows market share – even if too expensive). If you want an accurate, free market analysis then give me a call. Love, Robin.
