What controls Home Prices?
iT'S REALLY A SIMPLE ANSWER...THE MARKET CONTROLS THE PRICE.
The adage "What a Buyer is willing to pay and a Seller is Willing to take" for a specific property is the basis for Market Controlled Sales.
Of course, Sellers can ask what they want for their property, but unless the Listing price is seated in strong market support data and in the best possible condition, as a rule, it will not evolve into a Contract, much less a Closing.
Closed transactions in the prior 4-6 months of Listing your home for sale, comprise the CMA (Comparable Market Analysis). Realtors prepare the CMA, using Guidelines to establish a "like and kind" properties to your home in your neighborhood or surrounding area in close proximity.
The CMA will disclose pertinent factors such as Square Footage of heated space or living area and the Basement (if any), newer structure components such as roof, siding, HVAC, etc. and updated or upgraded components such as Appliances etc.
It will also detail any improvements the Seller has done during his ownership. For example, a new room addition or finishing the Basement or adding a pool or fence is considered "Improvement". Installing Hardwood floors to replace carpet, installing upgraded appliances, countertops and cabinetry are also cinsidered improvements. Interior/Ecterior paint, replacing damaged siding, repairing/replacing water heater, toilets and HVAC units are not considered to be improvements, but rather maintainance for the home and can affect the Buyers decision to purchase, but do little to increase the value or price.
The CMA also provides information about the terms of the Transaction such as Closed Price, any Closing Costs paid by the Seller for the Buyers loan, the type loan the Buyer obtained, incentives to encourage a Buyer to make an Offer and number of days the house was on the market before the sale consumated, if the property has a market history of expiring or price reductions prior to an Offer.
If you want more from your home than the CMA supports, prepare for a long market term and probable price reductions over the term before you get an Offer. In the meantime consider your carrying costs to hold the property until the Offer comes about. Typically, once the expense of the monthly payment, possible repairs that may have to be made to system failure not covered by a Home Warranty, far outweigh a hold out attitude for price. Market conditions change, seasonal interest level of the Buyer, Interest Rate flucuation and Loan avaiiability, can actually make the Value of your home decrease during the Days on Market. But worst case scenario, the home you had your heart set on to buy, is Sold to another Buyer, one who had successfully Marketed his home at the right price, in the right condition.
