"What do you think the value of my house is?" AND "What do you think this house sells for?" are both questions I'm asked on a daily basis and while I'd like to give you a definitive answer, the truth is "I don't know," AND NEITHER DOES ANYONE ELSE!
Because “value” is a moving target . . .
Agents assess a property's value with an eye towards “market value,” while appraisers are interested in calculating a property’s “intrinsic value.” As agents, Sarah and I are more likely to look at “market demand” as part of our calculation, while an appraiser will focus on square footage, along with bedroom and bathroom count, as well as any amenities. In both instances, condition is a major part of the matrix as we attempt to define “value” on any given property ("attempt" being the operative word here).
Moreover, “value” is a shifting concept. While current market value is at an all-time peak, disruptions from the 2008 financial melt-down resulted in a significant contraction, wherein too many homeowners found themselves upside down on their investments and walked away as a result. Only in the last few years, have we seen home values climb back to the high water marks set in 2006-2007.
And finally, “value” on any given day is one person’s opinion only. Who wants the house and how badly do they want it? Who else is competing for the same property? What's the affordability index? What are the current interest rates? What's the stock market doing? How secure is the economy? How high is consumer confidence?
Ironically, the Coronavirus, has INCREASED Bay Area values, due to high demand and short supply, when many had forecast just the opposite. (Fear often sends a market tumbling.) BTW, supply is still expected to radically shift once foreclosures become real as a result of job loss and the end of forbearance; consequently, the net impact of Covid-19 may very well have a negative impact when all is said and done. (History should tell the full story.)
In other words, there is no one clear-cut methodology to define the value of a home; it’s essentially a combination of our best guess, sales comps, and market exposure AT THAT MOMENT IN TIME! (The concept of time has never been more important than it is right now). Is your home better, worse, or about average when compared to other homes? Is your street better, worse, or above average when compared to other locations? What are your home's attributes? What are your home's shortcomings? (Sellers, try and be objective when answering these questions. We know you believe your home is worth more. News flash: ALL Sellers believe their home is worth more!)
But frankly, (and I'm nothing if not frank), it isn't an Agent's role to define the value of a property; it's our job to create desire demand, and urgency. Based on those components, the market will then move in and set the true "market value." Given that ALL searches must now begin on the Internet, getting your home in front of the most eyeballs and onto the greatest number of search engines is paramount, and why we often suggest a lower starting point than we believe the house will ultimately achieve. Make no mistake, our goal isn't to discount your lovely home; it's to create higher demand. Demand, more than anything else, drives the final sales price!
What's your house worth? It's worth what a qualified Buyer will pay for it at a given point in time.
As much as we would like to, Agents don't set the value of a property, nor do Sellers. What Sellers want, what they need, what they must have, or what they think, are all irrelevant to qualified Buyers. Buyers are far more interested in what the market will support, which is why buying a home in a vacuum is a difficult task. It's far harder to plunk down hard-earned cash when Buyers aren't overhearing their competition walking through the house extolling its virtues. That being said, we're still experiencing multiple offers on well-priced homes. (Overpriced homes languish in any marketplace, so take heed.)
So let's talk pricing, let's talk potential, let's talk rates, demand, and what's happening RIGHT NOW. Let's talk marketing, strategy, positioning, and design. Let's talk timing, disclosures, and what we bring to the process, but as to where your house will ultimately sell . . . absent a crystal ball, I'm sorry, but we won't define its worth. (We'd just as easily underestimate as overestimate.The end result is often surprising - even to the most seasoned Realtors.)
That being said, there's no team that will work harder to bring you the best and highest result. That's ultimately the job, the goal, and the agreement. Wouldn't you agree? (I thought so.)
How can we help you?
Julie Gardner, has been writing The Perspective for 18 years and has published more than 670 essays on life and real estate.