How do most people price their houses?
Mrs. Jones wants to sell her house. It’s a nice 3 bedroom house with 2 full bathrooms, a garage and a great looking garden. The roof was just redone and the kitchen was just reorganized.
Since she is looking to sell her home, she reads the newspapers, and notices a couple of places that seem to compare well to her house.
Those houses, with similar features, are in the $155,000 to $165,000 price range.
In reality, her house should be in the $145,000 to $155,000 price range, but after reading the newspapers, she thinks her house is in the $155,000 to $165,000 price range.
Suddenly, someone across the street puts his house on the market. That person has an open house the following Sunday and Mrs. Jones visits it.
That house is quite similar to Mrs. Jones’ house and the asking price is $170,000.
Mrs. Jones thinks that if he can get $170,000 for his house, while her house is located on the sunny side of the street and has a fireplace, then her house is worth more, $5,000 more.
Ouch! What a mistake!!
Mrs. Jones just lost touch with reality. In her mind, the person across the street is getting $170,000.
The person across the street is ASKING.
What we ask for our house and what we get are two different things.
When you think about it, it sounds crazy, but this is the usual way people set the price of their house.
In fact, when houses hit the market for the first time, they are usually overpriced.
For one thing, people are emotionally attached to their house.
More in this subject in our next article (november 11): Beware of real estate agents not wanting to miss out on listings.
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