How Much Is This House Worth?

"How much do you think this house will go for?", is the million dollar (quite literally!) question we often get as a Realtor.  In this wild Bay Area housing market, no one can predict what a house will go for.  We are all making guesses.

It's also important to know, that in our area, the list price of the house is not necessarily the price that the house will go for.  Sometimes, the list price is far off from the sale price, which makes the question of What Will This House Go For, even harder to answer.

I get this question often and I always have the same, sort of long, answer.  So I decided to write about it.

When deciding on the price of a house, the buyer should think of two things; 1) What could this house be worth, and 2) what is this house worth to ME, the buyer. How much am I willing to spend to make this house mine.

The first part is important because you don't want to feel like you overpaid for a house. Buyers remorse is real. Also, if you are depending on your lenders appraisal, you want to know that it will appraise at least to the price that you bought it at.  If it appraises at a lesser value, you may have to make up the cost difference with your own money, or loose out on the deal.  Your realtor can help with this part.  We do comps for you; look up what similar homes have sold in that area in recent months. It will give you an idea of what others have paid for similar homes.  Appraisers use comps, amongst many other criteria, so this information is valuable to look at as a buyer.

The second part is important in that it has nothing to do with the appraisal or the current real estate market. Instead, ask yourself, how badly do you want the house.  Is it your dream house? Does it fit everything you wanted? Have you been looking for ever and losing out on bids? Are you comfortable taking on that big of a mortgage?  Your dream house is going to be worth a lot more to you than to someone else.  In a sellers market you are competing with other buyers.
Or the reverse may be true as well.  It's not necessarily your dream house, but you would be happy if you got it for x amount.  Then that is the amount you should offer.

In this sellers market you are competing with other buyers and it's impossible to guess how badly other buyers will want a particular house.  I often describe to my clients that perhaps they are competing with a buyer for the same house, who has been looking forever, has flown into town for 4 days, absolutely has to buy a house right now, and has a lot of money to do it with. That's a tough buyer to compete against.  Or maybe the opposite is true, and for whatever serendipitous reason, there are no other buyers for this house, you are the only one, so you could get the house for a good price. These random situations could effect the price of the house.  It's not just the location, the cost per square foot, the finishes, etc.

To answer the question of How Much Is This House Worth, narrow it down to two factors; what could it appraise for (if you are dependent on a loan), and how much do you want to spend on it.
Now go out there and find your house!

Leslie Whitney - Helping you find your dream home.