When it comes time to buy a home or sell a home in Tallahassee, you will run across different people telling you varying stories about how they've come to value your home.
What you must understand is that it's all about perspective.
Everybody who has formed an opinion of value on a home has done so from a different vantage point. The key to getting the valuation that best fits your agenda rests in your ability to understand each valuers position.
Key Opinion's Of Value In Real Estate
For the most part, there are not many people who care what a home is worth. When nobody is interested in selling or buying the home in question, only Zillow has an opinion of what a home is worth :).
But as soon as a financial transaction is likely to occur, several of the following groups will crawl out of the woodwork, and you will be best served to understand their bias before accepting their valuation as the one on which you will make a decision.
Home Seller - When a seller is looking to value a home, they look for all the reasons why the home should be worth more. This shouldn't be too surprising, sellers usually want to get every penny possible when it comes time to sell.
Home Buyer - When a buyer is looking to value a home, they look for all the reasons why a home should be a better bargain. This shouldn't be too surprising as buyers do not want to spend more than they absolutely have to spend.
Neighbor Down The Street - Care to guess where this guy's bias lies? Sure, this person always thinks a home in the neighborhood is worth "extra" ... as it means his home is worth more too. It never hurts to get many opinions of value when it comes time to sell or buy a home, but this one likely represents a value ceiling far higher than the home will bear in the market.
Real Estate Appraiser - The appraiser is going to provide a valuation based upon a model designed to reduce the risk of third-party investors. Simply put, an appraisal is used by a bank or lending institute to make sure they don't lend "too much" money towards a home purchase. This means the bias is in favor of the bank, not the buyer nor the seller. You can learn a lot about real estate appraisals by studying appraisals done for other industries.
Real Estate Agent Interviewing For The Job Of Listing Agent - 2/3rds of all home sellers hire the first agent they interview. Agents interviewing for the job of selling the home know this, so they typically take advantage of the fact that the seller wants "more money" for the home and thus maneuver the presentation to be all about the home's value. Then they give a valuation higher than the home is worth in order to win the job. Obviously this works ... but it gives two out of three home seller's the false impression that they will sell the home at a higher value.
Real Estate Agent Showing A Buyer The Home - Much like a listing agent trying to land a listing, a real estate agent who is showing a home is just trying to land a contract. It is rare that an agent will give qualified advice on the value of a home (when they get paid to sell the home).
Your Properly Interviewed Realtor - Unlike the majority of real estate consumers, you can choose to interview Realtors until you find the one who can prove that they are well-trained and well prepared to help you with the job of buying or selling a home. Interview multiple agents, and ensure that you don't fall for the trick of selecting an agent based upon a valuation. Select them based upon the process that they can demonstrate will work in your best interests.
You - Ultimately, it is your valuation bias that matters most. If you trust your agent and you know that she or he is an expert at determining market values based upon trends in your area and your neighborhood, then the value you place on a home, whether selling or buying, is the one that makes most sense. As a seller, it will determine whether or not you want to sell your home, and as a buyer, it will determine how much that home is worth to you (not to some third-party entity that will not live there with you).
So the next time you are in the market to sell or buy a home, take the time to ensure that you pick a Realtor that is both well informed and well-trained to give you the valuation that best serves your interests. Take the information from this article to arm yourself with the knowledge of the bias that each one brings to the table so that when you get your next real estate valuation, you will know how well you should regard the opinion.
Of course, if you are in the early stages of buying or selling a home in Tallahassee, simply drop me a note and we'll schedule a time to show you our process that was designed to save you money, regardless of the home or homes in question.