At 10,000 square feet, the nuances from home to home appear minimal. Staring down at the redundant landscape made me wonder: Could sellers get more bang for their home by upgrading their neighbor’s instead of their own?
Here’s the scenario:
You own a home. You’re thinking of selling the home within the next year. You have $10,000 to invest towards upgrades to help you get top dollar.
Does it make more sense to invest that in your home or your neighbor’s?
Think about it. Home pricing is driven by an analysis of recent sales of comparable homes (comps). The appraisal and lending process each start by looking at closed comps—a baseline, if you will. Buyers who have been looking for months are aware of all the recent sales in the neighborhood, as well. By the time you’re ready to put that for-sale sign in the yard, the range of pricing has already been predetermined.
Now, imagine that there is a home down the street for sale. Same bed count, similar square footage, similar lot size, same year built and clearly within the same neighborhood. If you’re looking to put your home on the market in the next few months, all your attention should be on this home. What this home down the street sells for impacts what you could list your home for. How long this home down the street sits on the market impacts the perception of pricing for your home. The price reduction of this home further impacts that perception. It’s not your home, but it is certainly affecting the price of your home.
But your home has more upgrades, your home has more features…your home is “better.”
You have a more updated kitchen? Noted.
A pool? Got it.
A new roof? Great.
Don’t get me wrong, this helps, but it doesn’t change the fact that if the home down the street sells for $700,000, it’s no longer the home down the street. It’s now the most recent comp—it’s the closest comp. More importantly, it’s the most relevant comp. If you’re thinking of listing for $900,000, that home down the street is not setting the stage for you.
Rather than pump money into upgrade after upgrade to help drive your price closer to a $900,000 price tag, your money might be better spent driving up their $700,000 price tag.
Are we suggesting that you should walk to your neighbor’s house and buy them a new HVAC system or pay for their front yard landscaping? Maybe. Those dollars might bring more value when it comes to pricing your home than if you put those dollars into your home.
It might be an awkward conversation—but, hey, they’re moving anyways.
Karen Abram is founder and CEO of dashCMA. Visit www.dashcma.com to learn more about how to simply and visually support and defend your pricing strategy with dashCMA.