By Amy Stockberger
The definition of market value is what a buyer is willing to pay, but there is an art to pricing a home so that money isn’t left on the table while keeping the price within reach of the appraisal. It’s an art that an algorithm in a computer software cannot navigate, an art that only arrives with skilled immersion in our dynamic market. We feel that one of our superpowers at Amy Stockberger Real Estate is the ability to find that sweet spot of price.
With inventory levels being down over 30 percent from 2019, multiple offers are the norm right now — especially if the home is priced under $300,000. Multiple offers drive prices above the list price, which can cause financing issues if not piloted properly.
If a buyer is obtaining a mortgage to finance the home, the bank will require that an appraisal is performed and that the resulting value of the home is at or above the accepted offer price.
Eighty-four percent of buyers had to obtain a loan to complete the sale in 2019, and 87 percent have so far this year.
The bank’s underwriter requirements are that the appraiser researches homes that have sold within a mile of the subject property within the past six to 12 months. They prefer fresher data because the real estate market is dynamic. They want homes that are similar in age, square feet, bedrooms, baths, garage stalls, lot size and finishes. From there, adjustments are made, up or down, for parameters that differ from the subject property to arrive at the appraised value.
At Amy Stockberger Real Estate, our strategy is to price our homes not only on the sold market but also on the current competition. I call it loading my arsenal for my sellers, so if we must go to war, I am locked and loaded to go toe-to-toe for them, knowing what could be used against them and to their benefit.
In any market, buyers will look at and compare homes apples to apples. On average, a buyer looks at eight to 10 homes before pulling the trigger. This number is significantly lower in 2020 because of the drop in available homes. We feel we have to compare our subject property to our competition — is it better than, same as or worse for the wear? If we have little to no competition, have better condition whether it be updates, number of beds, baths, garage stalls or even floor plan, there is some juice you can add to that number. Computer software can’t adjust for that margin.
Zillow has invested millions to probably billions into its marketing platform. It is a massive marketing monster. Its app is user-friendly. And its name is synonymous with real estate. The business has marketed well. Very well. Its data, however, is at times wildly inaccurate. But how could it not be? Zillow has built algorithms to be copied and pasted across the world with A plus B equaling C each time. Real estate doesn’t work that way.
In every market, not just our beautiful little slice of heaven, there is a start and stopping point of each development, a different type of home type — single family, twin home, town home or condo — a different type of price point, square foot and amenities. A computer can’t adjust for those differences. Nor can a computer know the ins and outs of the amenities and the draw of different areas of town and how that influences home prices and appreciation. The blue sky above some areas is just worth more because of consumer demand. No robot can account for that.
Zillow’s algorithm does not know the differences in upgrades and updates from one neighbor’s house to the next. It cannot tell that the house next door, while under contract waiting to close, had five offers with an accepted offer of $10,000 over list price, meaning there are four other buyers pining for this area and they’re hungry to pay to get into a home while interest rates are at historic lows.
I can’t even tell you how many upset clients have called me regarding their Zestimate reported on that site, which is Zillow’s weak stab at trying to replace the human expertise needed to price a home. I have seen prices on their house that have been over $200,000 off on market value. Again, the definition of market value is what a buyer is willing to pay. How could an algorithm be made for such a thing?
Zillow also breaks buyers’ hearts too, sadly. With its data not being updated regularly, buyers will get very excited that the home of their dreams is still available, only to be crushed when they call and find out it went under contract weeks ago.
A new superhero app has arrived for consumers though, and the name is Homesnap. The interface is seamless and reflects Zillow’s app advantages for the user, with the data scraped directly from our local MLS consistently. The creators of Homesnap started building the app before Snapchat was released. Homesnap has a feature for Realtors that allows them to take a picture of the outside of a home and get instant tax and past MLS data such as past sold price, taxes, square feet and legal description. That’s uber-valuable to gather info for buyers on pricing trends.
The app also has convenient communicating capabilities between users and their Realtor. With overcommunication being the standard at Amy Stockberger Real Estate, we love it and couldn’t recommend it more.
Download the Homesnap app HERE for the most up-to-date homes currently on the market and coming soon to market.
However, no app can account for the human experience we all crave. Whether it be the first-time homebuyer or first-time seller, there are emotions involved, hand-holding, educating that is required down that delicate path. We as a species are complex creatures but have basic human requirements of communication. You need a skilled, fully immersed Realtor to navigate those waters for you to be sure no money is left on the table as well as act as your lifetime home support team.
For all your real estate needs, contact Amy Stockberger Real Estate. We are your lifetime home support team with a proven repeatable excellence model.
Check out our new Buyer MLS system to help connect buyers and sellers easier.