Selling Your Home - Single Most Import Fact You Must Know

Posted by Joe Manausa on Sunday, April 13th, 2008 at 3:21pm.

If you are thinking about selling your Tallahassee home, I would encourage you to understand how your home value is determined in the Tallahassee real estate market. It is not enough to worry about advertising and marketing coverage, as your valuation is the most important issue for you before you enter the market. I often hear a homeowner say something like "I have to get at least $35,000 after the sale of this home because of what I spent on buying it" or "I have to recapture the down payment that I used to buy the home." While I certainly understand the reasoning behind such statements, I often times have to be the one that breaks it to them that what they need is not a material factor in the price for which their home will sell. The fact is, real estate is a commodity, not a product, and the value of a commodity is set by Buyers. If buyers are excited and have a great demand for the commodity, prices go up and inventories drop. On the other hand, if buyers are not exceeded or are concerned about the market, inventories build and prices drop. The latter is what has occurred in the real estate market. If you ever want top know the directions of future pricing movements, all you have to do is track inventory changes. If more homes are coming on the market than homes are leaving the market, most likely, prices are dropping. Conversely, if more homes are leaving the market then are entering the market, most likely, prices are rising. I track inventory movement in the Tallahassee real estate market for this very reason. Perhaps a simple way to understand price movement in a commodities market is to know the story of the man who wanted to buy gold. Years ago, gold was selling at over $800 an ounce. The man really wanted a gold coin, but decided that the price was too high and he would wait to see if prices dropped. Fortunately for the man, newspapers began to announce the "end of the gold standard," and gold began to drop in value. People no longer felt they needed to be heavily invested in gold. So prices dropped, from over $800 to $600, and then eventually down to $400 an ounce. The man was elated and purchased his gold coin for $400, and the man was happy. But prices continued to drop. An ounce of gold was selling at $300 per ounces and then even dropped to $250 an ounce. The man felt that he should buy another coin (dollar cost averaging) in order to protect his position. And so he did, the second gold coin was purchased at $250. Now the man had two gold coins, but he really only wanted one. So he went to his neighborhood gold broker and asked him to sell the $400 coin for him. He said that he had paid $400 for it and would let it go for "just what he had in it." But the broker was confused. He knew that the man had just purchased a coin for $250 and surely must know that was what the coins were trading for. How could the broker sell a $250 gold coin for $400? While this story is simplistic, it conveys the same situation that many Top Tallahassee real estate brokers find themselves dealing with every day. We study the market and we know what homes are trading for. We can do many things in order to get the best price for the property, but only the best price that the Buyers are willing to pay. While Sellers get to make the decision as to whether or not to sell the home, they do not set the price. So the moral of the story, in real estate as in gold, is that the highest bidder always gets the sale. Often times, Sellers with a unrealistically high price are in affect, the highest bidder. In Tallahassee, many current homeowners are the highest bidders (for their own homes), and they will continue to own their home. If you absolutely do not have to sell your home, not putting it on the market (or removing it from the market) will help the value of all homes in the Tallahassee real estate market.  
As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible. Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market. If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.   Joe Manausa is a real estate investor and the Broker and Co-Owner of Joe Manausa Real Estate. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001. View Joe Manausa's profile on LinkedIn  

Joe Manausa, MBA is a 26 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.

1 Response to "Selling Your Home - Single Most Import Fact You Must Know"

Ned Carey wrote: What a wonderful analogy to get the point accross. Well written.

PS I found this post from the real estate blog canival. Congrats on being included.

Posted on Monday, April 14th, 2008 at 4:44pm.

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