List Price, Sale Price & Appraisal
What Does it All Mean?
When it comes to real estate, the terms "list price" and "value" are often used interchangeably, but they actually have very different meanings. Understanding the difference between list price and value is crucial when it comes to buying or selling a property, as it can affect the negotiating process and ultimately the final sale price.
OK, What's List Price?
The list price is the amount that a seller is asking for a property. This price is usually determined by the seller, in consultation with their real estate agent, based on a variety of factors, including the property's location, size, age, condition, comparable sales in the area and finally, how quickly the seller wants to sell the property. At the end of the day, the list price is used as a marketing tool, above all else and is not indicative of the actual value or final sale price of a property.
Then, What's the Value?
The value of a property is determined by a range of factors, including the property's location, size, age, condition, and features, as well as the current market conditions and the buyer's personal circumstances and preferences. Value is subjective and can vary widely depending on the buyer's perspective and needs.
While the list price and value may be similar in some cases, they are often different. For example, a property may be listed at a higher price than its current market value due to a seller's emotional attachment or overestimation of its worth. Conversely, a property may be listed below its market value in order to attract multiple offers and create a bidding war among buyers. This is the most common situation in the markets of Greater Boston and beyond.
When buying or selling a property, it's important to understand the difference between list price and value in order to negotiate effectively and make informed decisions. Buyers should expect their agent to conduct thorough research on the property and the local market to determine its current market value, and use this information to make a reasonable offer based on their budget and needs. Sellers, on the other hand, should consult with their real estate agent and be open to adjusting the list price based on feedback from potential buyers and changes in the market.
Understanding the difference between these two concepts can help both buyers and sellers navigate the real estate market more effectively and achieve their goals. It can be very discouraging to continually see properties being listed well under market value only to inevitably sell for $25-100k over list price. This is usually not because people are overbidding or overpaying for the property, it is because they list price was purposefully below market in order to attract as many buyers as possible.
Don't let the list price fool you!
Use an agent that is both an Accredited Buyer's Agent and a Pricing Strategy Advisor so you can be sure you know what the market data says a property is worth and can bid on it appropriately and actually win your dream home! Contact me today so we can talk more about your home search and you can have an agent on your side that knows how to win.
Wait, what about appraisals!?
A home appraisal is an evaluation of a property's value by a licensed and certified appraiser. The purpose of a home appraisal is to determine the fair market value of the property based on its location, size, age, condition, and other factors that affect its worth.
During a home appraisal, the appraiser will visit the property and conduct a visual inspection of both the interior and exterior of the home. They will also consider factors such as the property's location, lot size, and any improvements or upgrades that have been made. The appraiser will then compare the property to similar homes that have recently sold in the area to determine its market value.
Home appraisals are typically required by lenders when a buyer is obtaining a mortgage to purchase a property. The lender wants to ensure that the property is worth the amount of money being loaned, as the property serves as collateral for the loan. A home appraisal helps the lender determine the appropriate amount to lend the buyer based on the property's market value.