Taylor-Made Homefront: Things that won’t affect the value of your home

By Chad Taylor, the Taylor-Made Team

Even though most areas of town are still experiencing a seller-leaning market, and if priced correctly it is still a very good time to sell a home, there is one important thing sellers need to understand: even strong markets have limits.

At the end of the day, a home is only worth what a seller is willing to sell it for and what a buyer is willing to pay for it. Pretty simple equation, right? Not always.

In a strong market, sellers naturally want to push for the highest possible value, and frankly, I don’t blame them. My job is to help sellers maximize their return. But sellers hire me to help get their home sold, not just to advertise it. There comes a point where even a strong market will reject a home that buyers perceive as overpriced.

One of the biggest disconnects I see between sellers and the market comes from misunderstanding what actually affects the value of a home.

Here are a few things that often do not impact market value nearly as much as homeowners think they do:

• Functionally required updates

Replacing a roof, furnace, air conditioner, hot water heater, or even stabilizing a foundation absolutely makes a home more marketable. Those improvements matter. But buyers generally expect these systems to be functional. In most cases, they do not view these repairs as upgrades. They view them as part of responsible homeownership. Unfortunately, many of these items are also some of the most expensive things a homeowner will ever replace.

• What your home appraised for during a refinance

I cannot tell you how many times I meet with homeowners who are emotionally attached to a refinance appraisal from several years ago. A refinance appraisal is simply a snapshot in time, and markets change. Even worse, homeowners sometimes assume an appraisal is an absolute guarantee of value. It is not. Buyers determine value, not paperwork sitting in a file cabinet.

• What your neighbor’s home sold for

This one gets people in trouble all the time. Sellers love to compare their home to the one down the street, but no two homes are exactly alike. Condition, updates, floor plan, lot quality, location within the neighborhood, and presentation all matter. And let’s be honest, sometimes neighbors are not exactly transparent about what they actually sold for after repairs, closing costs, or concessions.

• What you paid for the home

The market does not care what you paid for your home five years ago, what you owe on it today, or what you need to net from the sale. That may sound harsh, but it is reality. Once a home hits the market, buyers compare it to the alternatives they have available right now.

• How much money you put into the home

This is probably the hardest one emotionally for sellers. Just because a homeowner spent a large amount of money on improvements does not mean the market will return every dollar back to them. Some projects absolutely improve marketability and help a home sell faster. Others were simply improvements that made the home more enjoyable while living there. And there is nothing wrong with that. Not every home improvement needs to be viewed as an investment strategy.

One of the healthiest things a seller can do before listing their home is separate emotional value from market value. Those are two very different things.

The sellers who tend to have the best experience are usually the ones who are realistic from the beginning. Ironically, those are often the sellers who end up creating the strongest buyer demand in the first place.

Because in real estate, perceived value matters. And homes that feel fairly priced tend to create the most competition.

If you are curious what your home might sell for in today’s market, I am always happy to be a resource.

Home Valuation