Four Mistakes Sellers Make

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Many homeowners do not know how to accurately determine the value of their home.  Owners often use unsound methods when setting their price and these miscalculations can greatly disrupt the selling process.  There are four deadly mistakes sellers make when determining the value of their home.
 
The Price You Paid When You Bought Your Home Is Not the Price It is Worth Now

The first is that they base their price on what they paid when they bought the home.  The real estate market is just like any other market; it is subject to supply and demand.  Prices in the real estate market, though not as efficient or instant as the Stock Market, are subject to going up and down based on the supply and demand.  The real estate market is more than four years into a buyer’s market so prices have been coming down.  This means that what you paid for your property in 2006 or 2007 does NOT have a bearing on what your home may be worth.
 
An Appraisal Should Never Be Used To Determine the Value of Your Home

The second biggest mistake in determining the value of your home is basing it on an appraisal, whether it is an appraisal for tax purposes or for a refinance.  These appraisal values are not an indicator for what a buyer is willing to pay for your property.  If the appraisal is for a refinance, the bank is looking to do whatever they can do to make sure you are able to refinance your home so they can make more money.  If the appraisal is done by a taxing authority, it is likely that they are going to overvalue the home so they can increase their revenue base.
 
Looking at the Cost and Features of Other Homes on the Market is Key

The third mistake a homeowner will make when setting the price for their home is adding together the value of the property and the cost of improvements.  Many homeowners think that if they paid $250,000 for their property and put in an extra $75,000, then the property must be worth $325,000.  This is not the case.  Your property does not stand alone; it is competing with the other properties in the neighborhood.  This is why it is important to know your competition.  An understanding of the amenities and features that a buyer can purchase in the resale market and in new construction can better equip a home seller to understand the supply and demand factors of the market.
 
What You Owe on Your Home Will Not Factor Into What Your Home Is Worth

The fourth and final crippling mistake a home owner makes when determining the value of their home is looking at what you owe on the property.  Prices in the real estate market have dropped significantly in the last four or five years.  You may have refinanced your property when property values were higher across the board or you may have taken out a second mortgage or home equity line during this time.  If this is the case, you may owe more than what your home is worth.  If you need to move and your home is worth less than what you owe on it, this is a special situation.  It is at this time that you need to consult a real estate agent.