Friday, January 31, 2014

What's My Home Worth?

What is my property worth? In most cases, not as much as you are thinking or hoping. One of our agents shared a story with me yesterday that reminded me that property owners don't always err on the high side.

A Cocoa Beach homeowner told her that she had recently tried to sell her house to a neighbor but that he wouldn't come up to her number and the deal didn't get done. In this particular case, the homeowner didn't have the house listed with a Realtor and was shooting for a number that was under fair value. I don't know if she was guessing or going on Zillow's "Zestimate" or perhaps the Property Appraiser's "market value" but, whatever method she had used to arrive at her number it was off considerably to the downside. Lucky for her, the neighbor also had a mistaken sense of the value and she didn't sell to him and leave tens of thousands of dollars on the table. Of course, she would have had the satisfaction of not having paid a real estate commission but her walkaway check would have been less even with the commission savings. I'm not making a case here for listing one's property with a Realtor rather than trying it alone. I am making a case for knowing what a property is worth before trying to buy or sell. Zillow and the Property Appraiser are not reliable sources for property value. Recently sold, nearby comparable properties adjusted for differences and market dynamics are the only realistic metrics one should use for arriving at fair value. Here's a link to Zillow's explanation to why the Zestimate is over 20% off on more than 15% of Orlando listings.

In our story here, the neighbor missed out on a good deal by not knowing what the house was really worth. Buyers, be aware that you can occasionally get a great deal from an uninformed, unrepresented seller. Usually, FSBOs are overpriced but sometimes not. Whether buying or selling, it's a mistake to assume that because there is no real estate commission being paid that the deal is sweet. In many cases, one party is getting the short end of the stick. If you've done your homework, you'll never be that one.

On another note, the asking price a prospective listing agent suggests is not the metric property sellers should be focusing on when interviewing agents. There was a time in the not too distant past when most good listing agents would not accept a substantially over-priced listing. Why take a listing that doesn't have a good chance of selling? It's a little different now. With the current low inventory it makes sense to take any listing just to generate leads from buyers that might buy something else. Continuing that logic, a listing agent might suggest an unrealistically high price in order to get a listing from an optimistic seller. Ask for comps and the basis used for the suggested asking price from a prospective listing agent.

I'm happy to give readers an opinion of fair market value of any property in our market. I'll arrive at that opinion based on research of recently sold comparables, not ten minutes on Zillow. Email me,

"I'd rather an incompetent ideologue than an apathetic cynic" __Regis