When selling your home, you’ll face many questions and considerations. Despite the term “buyer’s market,” real estate is always a “seller’s market” too, as homes are essential, and homeownership is valued.
Your home is unique, with its own individuality that sets it apart. There are no fixed rules on when to sell; people move for various reasons year-round. Your home’s value depends on recent sales of similar properties, regardless of the season. Ultimately, you set the asking price, either on your own or with an investor-agent’s help.
How do you decide the best price? What’s the best way to get online exposure? Do professional photos matter? This multi-part blog answers these questions to help you sell your home for the best price.
PART 1. Avoiding Sentimentality and Misleading Upgrades
A buyer of real estate is no different from a buyer of a painting or a bag of oranges. Both sellers’ and buyers’ perception of value will always play a prominent role during the sale. However, perceived value and market value are not the same.
To obtain the best price for your home, you need to know how to price it strategically and correctly from the start.
As a seller, keep two crucial points in mind when determining your listing price:
Sentimentality Has No Dollar Value
Although you have emotional connections to your home, the buyer does not. Avoid letting sentiment play a part in pricing the property. Set all emotions aside during the selling process.
Here are some examples of sentimentality that can affect how you price your home:
- Memories and Milestones: You might have celebrated many important events in your home, like birthdays, holidays, or anniversaries. These memories can make you feel that your home is worth more than the market value.
- Personal Touches: Customizations or renovations that you’ve done yourself, such as a garden you’ve nurtured for years or a room you’ve painted with your favorite colors, can create a sentimental attachment. You might overvalue these features because they hold personal significance.
- Family History: If your home has been in your family for generations, you might feel it has a higher value due to its historical and emotional significance, even if the market doesn’t reflect that.
- Neighborhood Ties: Strong connections with neighbors and the community can make you feel that your home is more valuable. You might think that the sense of community and the relationships you’ve built should be factored into the price.
- First Home: If it’s your first home, the emotional attachment can be particularly strong. The memories of buying your first property and the experiences you’ve had there can lead you to overestimate its market value.
These sentimental factors are natural, but it’s important to set them aside when pricing your home to ensure it aligns with the current market conditions and attracts potential buyers. Buyers look for cues to figure out your motivation to sell. If they sense you are emotionally attached, they might think you are less flexible on price, which could deter them from making an offer.
Upgrades Do Not Equate to Market Value
There is no direct dollar-for-dollar correlation between upgrade investment and market price. Don’t assume you can add the cost of upgrades to your asking price and expect to get it. This can trap you into making your home the nicest, but also the priciest, in your area. Instead, focus on making necessary improvements that enhance the overall appeal and functionality of your home without overpricing it.
Here are some examples of home upgrades that often do not equate to a dollar-for-dollar increase in market value:
- High-End Kitchen Renovations: While a modern kitchen can attract buyers, spending $50,000 on a luxury kitchen remodel in a neighborhood where homes typically sell for $250,000 might not yield a proportional return. Buyers may not be willing to pay significantly more for features like custom cabinets or high-end appliances.
- Swimming Pools: Adding a swimming pool can be a costly upgrade, but it doesn’t always increase the home’s value by the amount spent. In the Midwest with our cooler seasons, pools could be viewed as a maintenance burden rather than a luxury, and not all buyers want one.
- Extensive Landscaping: While curb appeal is important, spending a large sum on elaborate landscaping might not provide a high return on investment. Buyers appreciate a well-maintained yard, but they may not value expensive features like fountains or intricate garden designs as much as the seller does.
- Home Theaters: Installing a home theater with high-end audio and video equipment can be appealing to some buyers, but it’s a niche feature. The cost of installation often exceeds the added value to the home, especially if the space could be used for more versatile purposes.
- Luxury Bathrooms: Similar to kitchens, spending a lot on a luxury bathroom remodel (e.g., spa-like features, high-end fixtures) might not result in a significant increase in market value. Buyers may appreciate the upgrades but might not be willing to pay a premium for them.
- Specialized Rooms: Converting a room into a highly specialized space, such as a wine cellar or a home gym, can limit the appeal to a broader audience. These upgrades might not add as much value as more universally appealing improvements.
- Solar Panels: While solar panels can reduce energy costs and are environmentally friendly, the initial investment can be high. The added value to the home might not match the installation cost, depending on aesthetics and buyer preferences.
These examples illustrate that while certain upgrades can enhance the enjoyment and functionality of a home, they don’t always translate into a higher market value. It’s important to consider the preferences of potential buyers and the overall market trends when planning home improvements.
NEXT UP - PART 2. SALE PRICE VS. MARKET VALUE
Stay tuned to this multi-part blog for insights in selling your home.
