Even in a hot housing market, many home sellers buy into myths about home pricing that don’t match the reality of the market.
Experts from the Greater Las Vegas Association of Realtors and Realtor.com recently highlighted several of the most common pricing myths, including:
■ You always make money when you sell your home.
Home sellers shouldn’t assume they always will walk away with a profit. The National Association of Realtors estimates home prices will increase 5 percent nationwide by the end of this year. That said, 23 markets have seen the cost of single-family homes decrease in recent months, NAR reports. The return realized by home sellers greatly depends on their location and how much they paid for the home when they bought it. While local home prices have been rising in recent years, some homeowners might still be “underwater,” owing more on their mortgage than their home is worth.
■ A high home price will net you more in the end.
Sellers might be tempted to set a higher price to see if they can get it. While the thought of a big payday might be tempting, GLVAR President David J. Tina, a longtime local Realtor, said you might be sacrificing your prime marketing time.
“That kind of strategy can backfire on you,” Tina said.
He said potential buyers might assume something is wrong with a home that has been sitting on the market longer than most or has seen its asking price reduced multiple times, largely because it was overpriced when initially listed for sale. With homes selling at a near-record pace here in Southern Nevada, Tina said “about 70 percent of all local homes are now going into escrow within 30 days of hitting the market. So, if your home is still on the market after 60 days or more, there’s a good chance it’s overpriced.”
■ Setting a low price initially means you won’t make as much money.
Tina said pricing a home on the lower end of its market value actually can pay dividends. Besides selling faster, lower-priced homes tend to generate more interest from buyers. That can lead to bidding wars, which can push the price well past where it was listed.
■ Sellers can add renovation costs to the price of their home.
Just because sellers completed a renovation of their kitchen or upgraded their backyard, Tina said they should not assume they can recoup every dime of that investment when they sell their property. Some renovations might increase the value of a home but homeowners rarely recoup the entire cost of a renovation.
On average, according to realtor.com, sellers see a 64 percent return on every dollar they spend on home improvement projects. For more tips and examples, visit NAR’s Remodeling Impact Report at realtormag.realtor.org/home
GLVAR was founded in 1947 and provides its more than 14,000 local members with education, training and political representation. For more information, visit LasVegasRealtor.com. E-mail your real estate questions to firstname.lastname@example.org.