Perception vs Reality
I had a great conversation with a friend of mine over the Labor Day weekend. It had to do with the perceived value of a property versus the actual value of what it was sold for.
This person Thought that the property had a value of about 1.1 million dollars but it actually sold for $850,000. his complaint was that he felt that he had actually lost money that he should have made $250,000 more on a sale of that property
The reality is once we discussed his concern a little bit further as to what the demographics of the area were at the time and the market conditions for that area, it only made sense that the property would not sell for what he initially wanted for it.
He was in a changing demographic that Incorporated certain superstitions and religious qualifications that had to be met by the property. it was obvious that had he been able to overcome certain superstitions that were attached to his property (which he couldn’t) he may have gotten close to what he wanted. He was selling to a community or demographic, for example, that if you were within a certain distance of a cemetery or certain numbers were in the address of the house, it was condemned to bed Karma. therefore making the house undesirable and lowering valuation
This person Thought that the property had a value of about 1.1 million dollars but it actually sold for $850,000. his complaint was that he felt that he had actually lost money that he should have made $250,000 more on a sale of that property
The reality is once we discussed his concern a little bit further as to what the demographics of the area were at the time and the market conditions for that area, it only made sense that the property would not sell for what he initially wanted for it.
He was in a changing demographic that Incorporated certain superstitions and religious qualifications that had to be met by the property. it was obvious that had he been able to overcome certain superstitions that were attached to his property (which he couldn’t) he may have gotten close to what he wanted. He was selling to a community or demographic, for example, that if you were within a certain distance of a cemetery or certain numbers were in the address of the house, it was condemned to bed Karma. therefore making the house undesirable and lowering valuation
When communities change it has a drastic effect on property values. This is evident throughout the United States and in many respects the world. Many communities are communities of culture which set the standard for how and where they will live. Some cultures have a positive effect on Real estate pricing and some do not. In the case of my friend, his property was affected by the community that was changing in his area, which shifted the demands and requirements for that type of house, resulting and a lower value for the properly.
I always think about Michelangelo's portrait of Salvador Mundi which was auctioned off for $450.3 million million dollars. People were astonished at the price that this painting was able to command, but the best way to explain it is the same as with real estate, The market value, whether it be a painting or a home, is based on what someone is willing to pay for it. End of story.
I sometimes go and meet people that are ready to sell their home and have a very inflated perception of the value of the property. Real estate selling and buying is an emotional thing. Your emotions can create a false perception of value, but the hard numbers create the reality of it. How you control your emotions and use the real numbers, will either guide you to a successful close or leave you sitting disappointed with a property that cannot sell.
This is just one example of some of the topics that needs to be discussed when you’ve reached the time that you want to put your house on the market for sale..
If you’re Getting your home ready for sale.
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Future topics are;
- Placing your property in the MLS Against other homes competing in your market.
- Is your house market-ready?
- Buying your next house I'm closing on the same day as your house sells.
- home sale contingencies when selling or buying.
- What are some of the costs when selling your home?
- Key points about Realtor contracts
- Do I need a lawyer or can I just do a title closing?
- How do I deal with home inspection issues
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