Selling homes in Gainesville Florida is challenging enough without having to contend with — how can I put this politely — unicorn pricing.
What is unicorn pricing?
Unicorn pricing is delusional pricing – that is, house pricing that has no basis in reality when looking at comparable sales.
EXAMPLE #1
- Pre-approved buyer sees a home.
- Pre-approved buyer falls in love with the home.
- Pre-approved buyer makes an offer on the home, basing their offer amount on the recent sold comps for the neighborhood.
- Pre-approved buyer is soundly rejected by home seller who finds offer based upon recent sold comps to be offensive. (Just because the comps are offensive doesn’t mean they are not accurate. Heck, who ISN’T offended by the market right now?)
- Pre-approved buyer is crushed to learn that the only offer home seller will accept is one that is reflected in the appraisal that was done. In 2007. Bring on the unicorns.
EXAMPLE #2
- Pre-approved buyer sees a home.
- Pre-approved buyer falls in love with the home.
- Pre-approved buyer makes an offer on the home, AGAIN basing their offer amount on the recently sold comps for that neighborhood.
- Pre-approved buyer is AGAIN soundly rejected by home seller, even though the comps, AGAIN, were submitted with the offer.
- Pre-approved buyer is crushed to learn that home seller, based upon counteroffer received, is STILL not willing to accept an offer based upon sold comps.
EXAMPLE #3
- Pre-approved buyer sees a home.
- Pre-approved buyer falls in love with the home.
- Pre-approved buyer hesitates to make an offer on the home. WHY? Because the home is substantially priced over market value.
Does anyone else see a pattern here?
The market is what the market is, and if a home seller is not willing to accept an offer based upon market value, the house does not have any business being on the market.
Lord knows our inventories are swelled enough already. Adding delusionally priced homes to the mix is just going to keep home prices down longer.
If you want to sell your home, you need to price it based upon the values that other homes in your area are selling for.
Why? Because if the homebuyer looking to buy your home is going to get a mortgage, your home will need to be appraised. What does that mean? It means that, in order for the homebuyer to get a mortgage to buy your home, your home needs to appraise for at least the agreed-upon amount the offer was written up for.
How does the appraiser figure out how much your home is worth?
By looking at the statistics of the recently sold comparable homes which have sold in your area. These would be the same statistics your agent looks at when coming up with a price range for your home.
What happens if your home does not appraise for the amount of money the buyer offered to pay for your home?
The homebuyer has an opportunity to walk away from the contract.
So — even if you find someone willing to pay over market price for your home, you run the very real risk of keeping your house.
Is that a risk you are willing to take?
Don’t believe the hype. When it comes to matters of real estate, unicorns are very bad for business.
