Home Selling in Homewood>Question Details

Monica, Both Buyer and Seller in Homewood, IL

How do you price your house fairly when houses around you are selling for much less?

Asked by Monica, Homewood, IL Mon Feb 21, 2011

We have a 2 bed/1 bath home. We've priced our house at $189,000 in hopes that we can sell between $165,000 - $170,000, have enough to pay off mortgage and be left with enough for a 20% downpayment on our next home. Anything less than that and we will not be able to afford to move. We've had some insulting offers and comments. Our home is COMPLETELY remodeled with all new mechanics, roof , appliances, and a brand new kitchen and bath. Similar 2 bed/ 1 bath homes in the area are selling for $115,000 - $140,000 but are not remodeled and need a lot of work, and some are forclosures/short sales. We are getting frustrated because we are getting the "Well the 2 bed/ 1 bath around the corner is selling for much less" comments. But that home needs a roof, is not remodeled, has a one car attached garage (we have a 2 1/2 detached), has the original 1950's kitchen, and bath,etc. How do you compare apples to oranges?? Have we priced our home fairly?

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Monica -

You are the voice of the average seller trying to compete with distressed properties. Your frustration is valid. But the good thing is, some people want a fixed up turnkey house. They don't want to do any work.
To be perfectly honest, the upgrading sounds great, but 2 bedroom houses/1 bath are a tough sell. Most people want at least 3 bedrooms on a single-family home. That takes you out of the search for a lot of people. That is your advantage over the short sales. To be honest, I think $189k is way to high for a 2 bed, 1 bath home. I just sold a fixed up home with 4 bedrooms and 2.5 baths to a buyer for $160k in Glenwood (HF district). You have Homewood and that is worth more, but I would lower it closer to what you will take to get more people interested. Plus, as someone said, it must appraise out.

One thing you want to remember, though, is that if you sell, what you would buy will be at the lowest price too. So, you will save a lot in the long run. I would be happy to come out and give you an accurate price with what you can buy and sell and give you the whole picture on how to get buyers. I work with first-time buyers all the time and would be happy to advise you on how they can be attracted for a property such as yours. Homewood is a great area and a lot of people want that school district.

You can call me at 888-788-9544 or email me at suzanne@remarketingconsultants.com. Good Luck!
1 vote Thank Flag Link Mon Feb 21, 2011
Monica, everything you say makes sense, but the fact is - the market value is determined by willing buyers and sellers agreeing on price. Buyers do not appear to be terribly motivated, and if the $130,000 fixer isn't selling, and the $189,000 cream puff isn't selling, then both of them are likely priced too high for the current market.

I think it is wise to ignore comments from the General Public. Back in the fast times, when we could get three, five, seven, ten offers on a single property - all above asking price - there were still fifty people who came through the open house and didn't buy it. Should we have asked them what they thought about the house?

The other thing is that people feel the need to give answers, even if they are not complete or provide a solution. So holding them to the standard of say, a reviewer, is both unfair and not particularly useful. They didn't buy the fixer, they're not buying your house, and it doesn't really matter why - unless it's price, in which case you have the right to say, "Thank you, but no."

All the best,
1 vote Thank Flag Link Mon Feb 21, 2011
Some buyers prefer to buy cheaper and do the upgrades to their own taste and standard. Many buyers want move in ready, but an equal number like to pick the colors, do the work themselves and save the money. I suggest you pay a fee for appraisal appraiser $350/400 and price right there or 5% under. That will constrain the ultimate buyer whenever you do get a contract. Price it at appraisal and you will not be surprised that the appraisal came in $15k under sales price and the deal falls apart. As Suzanne mentioned, it is good to buy up in a down market! put down 10% on your next house and buy a larger home discounted that you could never have afforded before. between the low rates and the low prices, you will do very well to trade up in this tough seller market.

Best of luck!
0 votes Thank Flag Link Tue Feb 22, 2011
The fact is, this is a buyers market and buyers will not pay higher than necessary because they are scared to lose the home or be house poor. The fact is, if homes like yours that are not remodeled are selling between $115,000 and $140,000 and you're asking $189,000 then you are pricing yourself out of the market. In fact, even with those improvements you made, someone would rather save $50,000+ and qualify for the home now and slowly upgrade over time. Plus, who says that buyers like your taste enough to pay such a higher amount than others in the area.

You are pricing your home to high and it may not appraise. Plus all you're doing is helping the other homes look more appealing
Web Reference: http://www.RhondaHolt.com
0 votes Thank Flag Link Tue Feb 22, 2011
Your home's price is subject to what is going around you. When times are good and an area is in demand, active pricing goes up accordingly. Consequently, the opposite is true now. Only a good marketeer (full time agent/ office), a strong negotiator (agent) and a positive appraisal for a strong buyer, can work in your favor during these challenging times.
0 votes Thank Flag Link Tue Feb 22, 2011
Hi Monica,
I can feel your frustration. This is a very difficult time to figure pricing. Currently, the appraisers are
only going back 3 months on solds, and they are now picking up the current actives, to watch the
trend of the market in a particular area. In the 26 years that I have been selling homes, this is the
new way things are done. If the appraisers don't work with the "new" guidelines, the underwriters won't
approve the appraisal, and the whole deal can fall apart.

Back to whether you have priced your home fairly or not. It sounds like your home is gorgeous, and
I'm sure you spent a lot of money to make it just the way you wanted it.

One of the things in real estate that has never worked in pricing a home, is choosing a price that
suits your needs. The amount of money that we would like to receive from our homes to factilitate
future plans, has no relevence to the actual value. This market is so competitive, and with so many
homes so much less in price, buyers can use special financing to remodel the home, and feasibly
still be at a lesser price than your proposed pricing. The problem comes in as other homes sell, and at
a lesser price, those newest solds are our newest comparables, bringing pricing down.

As a professional, I want to help you sell your home. In doing that we need to look very closely
and honestly as to what is happening in the market.

I can understand you wanting to put 20% down on your next home, that is a good thing to do. But, lets look
at the housing that you want to move into. True, pricing is down on your home, it is also down on what
you are looking to purchase. Lets take a look at all the numbers and see where we are at.
The lower price on your buy end, may offset the lesser price on your sale.

If I can be of service to you, please let me know.

Mary Haller
Partners Real Estate
0 votes Thank Flag Link Mon Feb 21, 2011
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