We’ve all played at least one of the 3,019 (as of yesterday) versions of the game Monopoly, right? Even in so many versions, there’s still a few rules we all know. You beat the other players to a property, you get to pay the price on the square and own that property. That part is pretty straight forward. No one would dare go rogue and try to buy a property they didn’t land on… that’s against the rule. If only real life had rules.
I hate to be the one to burst your bubble, but here it is.
1. The price of the home is the price you pay. – False
Just because the seller has listing a home for a price doesn’t mean that’s how much he will take. It also doesn’t mean that it’s how much it will sell for.
2. Every home has a specific value – False
There is no set price for a home, there is no set price per foot for anything in any area. There is no set price for a bedroom or a pool or even your choice in flooring. The price is not based on what the seller wants to make for it, or even what the buyer wants to pay for it. The price is supported by the recent similar sales, but even that won’t have a scientific answer, and it will change, sale by sale.
3. If you want the sales price, have it appraised. – False
An appraisal is nothing more than an individual saying… “I think it’s worth this, and here’s why I think that” based off of homes he finds to be similar. Every appraiser will have a slightly different opinion… and sometimes not so slight. It may also differ based on whether there’s a buyer willing to pay a certain amount or not. Whether there’s a lender behind the purchase or not. Many different factors.
4. If I do certain upgrades it will raise the value $xxx. – False
You are never guaranteed any amount for anything you do to your home. A pool is not worth $5k, a bedroom does not add $10k. A new roof or new AC doesn’t a $1 to your value.
Your home will be worth what a buyer is willing to pay and what an appraiser can justify based on near by similar homes. How much that pool is worth will be determined by nothing more than anyone’s guess.
5. My neighbor sold for $xxx and our house is pretty similar, so that’s what my house is worth. – False
Your house is worth what your buyer is willing to pay. Your neighbors buyer was willing to pay that amount. Maybe it was based on the rooms, the layout, the neighborhood or simply skill of negotiations… or maybe it was based on the scented candle in the kitchen and 30 year old shade tree out back. You need a new buyer, so the price is again, anyone’s guess.
The bottom line is there are are absolutely no rules in real estate. Neither buying a home or selling one. It’s not about determining the rules and following them. It’s about creating the path and convincing everyone else to follow along.