2 Things You Need to Know to Properly Price Your Home

In today’s housing market, home prices are increasing at aslower pace (3.7%) than they have over the last eight years (6-7%).However, they are still are above historical norms. Low supply oflisted homes and high demand from buyers has pushed prices to riserapidly.

In the mind of the homeowner, annual home price appreciationover 6% has become the new normal. This becomes a challenge when ahomeowner looks to refinance or sell their home, as the expectationof what the homeowner believes the home should be worth does notalways line up with the bank’s appraisal.

Every month, the Home Price PerceptionIndex (HPPI) measures the disparity between what ahomeowner seeking to refinance their home believes their house isworth and what an appraiser’s evaluation of that same homeis.

Over the last five months, the gap between the homeowner’sopinion and the bank’s appraisal has widened to -0.78%. Thisis important for homeowners to note, as even a 0.78% difference inappraisal can mean thousands of dollars that a buyer or sellerwould have to come up with at closing (depending on the price ofthe home).

The chart below illustrates the changes in home price estimatesover the last 12 months.

While the appraisal gap widens, another trend is alsobecoming more common.

According to realtor.com, “the shareof homes which had their prices cut increased by 2% compared tolast year”. Thirty-seven out of the 50 largest UShousing markets saw an increase in overall price reductions.

In today’s market, you need an expert agent who can helpprice your house right from the start. Homeowners who make themistake of overpricing their homes will eventually have to drop theprice. This leaves buyers wondering if the price drop was caused bysomething wrong with the house. In reality, nothing iswrong- the price was just too high!

Bottom Line

If you are planning on selling your house in today’smarket, let’s get together to set your listing price properlyfrom the start!