Real estate 101 teaches us that market value is the price at which a seller is willing to sell and a buyer is willing to buy. However that doesn’t always apply to the amount a home will appraise for, and when you’ve got a lender involved at 80% of the value or greater, that lender will rely on an appraisal. And appraisals are an opinion of value, not fact. This is what can get Sacramento sellers in an uproar.
They know what their home is worth. I, as their Sacramento Realtor, also can generally accurately predict how much a buyer will pay, based on how I will market the property. Another agent might not get the same result; in fact, I know other agents don’t. Because they won’t take the listing. They think they know more than anybody else in the universe about Sacramento real estate. When they don’t.
A common question asked by Sacramento real estate agents and directed toward the listing agent is how much will the seller take for that home? Now, you see, I could swear that there is a listing price attached to that home, but maybe the print is too small to read. I know, we could outfit buyer’s agents with those big honkin’ magnifying glasses like you see in photos of Sherlock Holmes. Or, maybe we should attach spectacles to a chain they can keep in their pockets or wear around their necks to whip out for such an occasion?
Trying to pick a sales price when there are few to none comparable sales is a little bit tricky in our Sacramento real estate market, but this is when an experienced real estate agent can be very helpful. Sometimes it comes down to relying on gut instinct, mixed with a bit of pixie dust sprinkled on top of those dusty old comparable sales, to come up with an accurate and reasonable number.
Further, I might do goofy things that are right on target such as grab a random sales price from 2005, divide it in half, multiple that result by 50%, and then slap another 25% on top to arrive at an estimate of value, which is often much closer than Zillow’s screwy Zestimate and computed about in the same fashion. But that’s just to double-check the ballpark. It’s not to pick a sales price.
Condition of property is one of the big three elements when selling Sacramento real estate— or any home in the Sacramento seven-county region — but it’s often overlooked or dismissed by sellers. They get used to their house the way it is. They might say something like, “Oh, we’ll let the buyer take care of that issue.” Unless the house is pretty much a tear down, or needs such extensive work that we call it a fixer home, a home buyer will not do those repairs / corrective work. End of story. Only an investor will buy that kind of home today. And investors aren’t paying full price this spring.
Most clients will say that they completely trust and value a professional opinion until the day comes when they disagree with their real estate agent. The agent can see it coming, too, but by then it’s generally too late because the client will have already said something emotionally telling like, well, if you don’t agree with my opinion of value, then you should ask my daughter. The daughter who is not a Sacramento real estate agent and who has no experience in real estate.
The agent can haul out the heavy artillery, the trending charts showing the past year or so of real estate activity in that particular neighborhood, including days on market, sales price to list price ratios, absorption rates, median sales prices, inventory levels, but it won’t matter. It won’t matter because the client will spot a home that is nothing like the client’s home but that home will have sold for much, much more than the true market value of the client’s home. That particularly expensive home might have sold for more because it has a spectacular view, which the client’s home does not. That home might have sold for more because it is 1/3 bigger than the client’s home. That home might have sold for more because it has upgrades and features that the client’s home might not possess.