For What It’s Worth

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Let’s shift gears for a moment, shall we? Let’s talk real estate. Stop! Wait! Before you close this page out because you think it doesn’t apply to you, hear me out. Be patient. I’ll try to throw some funny stuff in here to keep you hooked, but this is an important topic for pretty much everyone and here’s why…

If you’re renting, it’s good to know a little about home prices and what to expect if you’re looking for a new place to live. It can help you evaluate whether you should stay where you are or purchase a home. If you already own a home and have absolutely no intention of selling it, you should still know what your home is worth- it’s a part of your financial portfolio and how do you really know what your assets are worth if you don’t have them evaluated from time to time? (Geez. Listen to me talking about finances and investments. If 20-year-old me could hear me, she would say, “who even is that?”)

Lastly, if you’ve considered the idea of upgrading, downsizing, need a change of view or need to get out of dodge completely for some reason, you need to know what the market value of your home is before you list it. So, bear with me, Readers! You might learn something here!

This is the most important thing I will say about what your home is worth. Are you ready? Your home is worth what someone will pay for it. That’s it. Bottom line.

When my grandfather was alive, that man saved everything. His house was a collection of some pretty unique items. That’s about the nicest way I can put that. When I was kid, his house and his flower shop were magical places, filled with things that came from all over the world and some items that came from some dude that sold items out of a run-down van. As I grew older, I would sometimes shake my head at the things we found in his house. I specifically remember one item- it was a two-foot high glass clown statue. The clown was wearing a teal jacket and had an orange and teal hat. That thing fell out of the ugly tree and hit every branch on the way down. One day he was telling me how valuable all his things were and I was doing a pretty good job of keeping myself intact, but when he brought that item to my attention and said it was a very valuable collectable, I lost it. I started laughing. I just couldn’t hold it in any longer. I can still see the look on his face- he got intensely serious and said, “it is!” I wanted so badly to respond with “maybe it’s an item that people collect. Maybe you paid a lot for it. But guess what… that thing right there is worth what someone will pay you for it and not a penny more and good luck finding that guy.” But I didn’t. I kept my mouth shut and just said, “Ok, Grandpa.” I added a “whatever” in my head but if I had said it out loud, I would’ve regretted it in a hot second.

That right there is the truth about anything. You can produce the most beautiful clothing, the most high-quality furniture and the most elaborate homes. But if we all agreed on value, there wouldn’t be clearance sales in every store in America or price drops on properties in even the best markets.

When someone asks me what the value of their home is, I do some research and here’s how it’s done… I look at various factors- age, location, style, condition, size. I once was helping a young couple purchase a home and they wanted to see a FSBO. I couldn’t figure out how the sellers came to the price where it was listed, so I asked them. Their reply was this- “the house across the street is for sale at this price, so we thought that’s how we’d price ours.”

No. Just no.

First, their home was a ranch and the house across the street was a split foyer. The split foyer had more square footage and was newer than their ranch. I sat down with them, explained how we determine square footage, and showed them some appropriate comps. My explanation justified my telling them that they had overpriced their home. It wasn’t their fault, they just didn’t know how it’s done, they tried to do it on their own and all the buyers coming through their very nice home weren’t putting offers in because it was priced too high. The sellers were disappointed, but the numbers don’t lie and they accepted my clients’ offer. (Annnnnnnnnnd this is why you hire a Realtor. That’s another blog post for another time.)

There is so much to say about those particular factors because it’s not quite as easy as I made it sound a couple of paragraphs ago. Yes, we look at age, location, style, condition and size, but, some homes have some very unique features, some have more land than others, some are in terrible condition, while others, although older, might be incredibly well-maintained. Some have pools, while others have heated garages with workshops.  These different characteristics and features mean different things to each individual. Understand that all of those factors above deviate from house to house and need to be considered in order to put a reasonable price tag on it.

But again, here’s the bottom line. A buyer will ultimately determine the price of a home. You can get my opinion. You can hire an appraiser, and get his opinion. And those are excellent steps to take in helping you price a home, but the truth is, a home’s value is determined by the amount for which it’s purchased.

If you’re a renter and you want to know if owning a home is a possibility, talk to a Realtor and ask her to help you find something comparable in price to what you pay in rent. Talk about taxes and insurance, HOA fees, principal and interest and basic home maintenance. A good Realtor can not only help you through that process and recommend a dependable and efficient local lender, a good Realtor will also run comps on houses you’re interested in purchasing to verify you’re not overpaying for a house.

Already own a home but don’t want to move? That’s ok! A Realtor can look at your home, learn a little about it and give you an idea of where your home stands in the grand scheme of your local market. Knowing what your assets are worth is really helpful when you need to talk about upcoming life changes of any sort. That’s when you ask for a Real Estate Review- it’s full of useful information about what’s going on in the market- locally and statewide, even on a national level- as well as statistics and input about where your home stands in the middle of it all. I do Real Estate Reviews for some of my clients every year at the same time so they can see how their investment has appreciated.

Ready to sell? That’s when you want a Realtor to do a Comparative Market Analysis, or a CMA, because this is where pricing is really important. You can have a spectacular home, brimming with all the latest and greatest home trends, appliances, new mechanicals, new roof, stunning curb appeal, but if it’s priced too high, it’ll sit and just continue to cost you more money and waste your time. Here’s why… buyers have agents too.  Remember what I said about protecting buyers from paying too much? If I walk my buyers through a house and they love it, I’ll run comps (comparables) on it and if I think it’s too high or in danger of not appraising when their lender orders an appraisal, I’ll tell my clients. And while there are lots of sellers out there that think if they price it high, someone can always put in a lower offer, consider this… How many auctions do you go to where the auctioneer says, “We’re starting this item at $1000” and everyone starts bidding at $700, 750, 800. Nobody does that. My broker used that once and I thought it was brilliant. Don’t fall into the “I’ll price it higher, and they can always put in a lower offer” trap.

There are things you can change and things you can’t that will affect the price of your home. You’re not going to pick up the house and move it, so you can’t change the location. Unless you want to add an addition right before you put it on the market, you can’t change the size. I’ve never been exposed to anyone with magical powers that can change the age of a home and save adding a second floor or completely renovating the home before you sell it, you can’t make your two-story a ranch or your split foyer into a two-story. The only thing you can change is the condition. Your Realtor will be able to guide you on what changes will pay off and surprisingly, some of it won’t cost you much but will have significant impact and make a huge difference in how people see your home.

With all that said, it’s fascinating to me what people are attracted to and if someone finds something about your home that’s a good fit for them or makes it their “forever home”, they might very well pay you over asking price and there it is… the home is worth what someone will pay.

Personally, my favorite homes are what I call the “grandma house”. Generally, Grandmas take care of things. They have things repaired. They change filters. They might not put up the latest light fixtures, but they’ll upgrade the electrical panel if it needs doing. They probably don’t have the most modern appliances, but they clean and care for the ones they have, and they still work, even if they are a thousand years old. Grandmas are the best. They are proud homeowners and they take care of their shit. That’s the best description I can give you and when I walk into a Grandma House, I almost always fall in love with it and appreciate the effort the sellers have made to keep it in pristine condition, despite the fact that it isn’t completely updated. I’m not a fan of trends so I’ll take Grandma’s house any day. I open the door to a mid-century, brick, ranch home and it’s SWOON time. Brass or crystal doorknobs, pocket doors, solid wood paneling, walk-through pantries (not panties- I may or may not have listed a home with an enormous panty once.) Those are the things that make my heart go pitter-patter. Hardwood floors, blonde wood trim, built-ins…it just kills me. I don’t even care if it smells like Grandma’s house. I’m all in. I once came across a flecked Formica countertop with a built-in blender. A BUILT IN BLENDER!  I just shouted that while I typed it. Oh! The wonder of it! And a Dutch door? A Dutch door could be the cherry on top that sends me right to the writing table. I saw one recently and I was so happy my client was just as excited about it as I was because I felt a lot less weird. She is clearly one of my people.

So… doesn’t matter what your situation is- talk to a Realtor (preferably me, of course, but if you’ve got someone who understands you, stay with them) today about the possibilities for your future, the value of your assets or request a CMA and consider the possibility of selling your home and as my brokerage Ruhl&Ruhl says, “move from the life you have to the life you dream about.”