What is the True Value of a Property?

Clients often ask Realtors, "What do you think this house will sell for?" However, offering a specific dollar amount can lead to unintended consequences.

It's tempting to inject your opinions as a professional; sometimes, you may make accurate assessments. Yet, if you miss the mark, it reflects poorly on your expertise. The future market sales remain uncertain; without a crystal ball, we cannot predict outcomes with certainty.

For instance, consider a buyer who has fallen in love with a property listed at $500,000. They seek your guidance on its potential selling price. After analyzing the comps, you suggest $475k. Unfortunately, they are outbid and lose the property, casting doubt on your judgment.

Alternatively, if you recommend a selling price of $550,000, and they secure the property by significantly outbidding others, they might feel they overpaid, again putting your judgment into question.

The truth is, THE VALUE OF A PROPERTY IS DETERMINED BY WHAT A BUYER AND SELLER AGREE IT IS WORTH. Let's say a home appears rundown, and an appraiser assessed it at $50,000. If a willing buyer offers $500,000 and the seller agrees, that becomes the property's value. While this example may be exaggerated, it emphasizes the point.

It's wiser not to offer personal opinions on a property's value to avoid such predicaments. The actual worth remains elusive until both parties sign the dotted line and the transaction concludes. Instead, it proves more beneficial to present clients with comparables and let them determine a price. Then, as a skilled agent, you can negotiate diligently to surpass your client's expectations and secure a better deal than they initially sought.

So, when clients inquire about a home's potential selling price, a simple response is, "Whatever the seller and buyer agree to." We hope this is helpful to you. By the way... we're never too busy to help with your transactions. Send us your next contract!