After years of taking care of your home, you are ready to sell. You may have made some minor home improvements. Maybe you even completed a major renovation. The trouble is, you think your home is worth more than the experts are saying. According to a company that establishes residential and commercial property values, many homeowners overestimate its value. RPS Real Property Solutions says a full 26% of homeowners think their property is worth more than it really is. In addition, they expect to achieve more than 10% of the actual appraised value. It is understandable. You may be watching home prices go up in your neighbourhood. Everyone wants to get the most for their largest asset. Something else that happens is you have an emotional bias toward your own property. Many homeowners think their house is worth more than it is.
Why is the appraised value lower than expected?
Many of us convert the sentimental value of cherished memories in our homes into monetary value. The pride we feel for our homes does not translate to actual dollar value. The charm of a cozy kitchen spent sharing meals with loved ones can be seen as too small or too dark for prospective homebuyers.
What is the post-renovation value of my home?
Another reason for overestimating a home’s price point is the value homeowners attribute to renovations they have made. You may have watched the end of a home makeover show on TV. The homeowner often
finds that their home is worth more than the pre-renovation value and the cost of the renovation combined. That is not always the case. It’s true that your investment does increase the value of your home, but it may not be as much as you think.
Where does that leave home sellers?
Caution and preparation are recommended approaches to take for anyone looking to sell and buy. Often, home sellers rely on the value of the home they are selling to support financing the home they are looking to buy. In such cases, if the home you are selling will not sell for the amount you thought, you will have a financing gap. Before you are left scrambling, work closely with your real estate agent and your lender or mortgage professional. Explore different scenarios and your options to achieve the desired outcome.