Perception vs Reality – Not MY house

While the majority of us can’t seem to ignore the constant media attention devoted to the down real estate market, some home sellers have managed to miss the reports. They still believe that while the value of just about every home on the market has gone down, somehow their’s has not. Some even think their value has gone up. It’s normal for homeowners to think that their house is better than others in the neighborhood because, after all, you chose it from the numerous other homes for sale at the time. Unfortunately, your perception of your house does not determine its value in the eyes of a buyer.

Zillow.com has created a “Home Value Misperception Index” (I kid you not) to measure the gap between the percentage of homeowners who believe their home value increased over the past year and the percentage of homes that actually have. The Zillow survery revealed that 62% of homeowners believe their home has gone up in value while the rest of the nation has declined. The truth is 77% of the nation’s home values dropped during the second quarter of this year. 19% of homes did go up in value and about 5% stayed the same (values are rounded and don’t add up to 100). The west has been hit hard by declining home values so you can bet Bend isn’t in the 19% or 5% of homes that didn’t depreciate. Actually, if you look at home values in the west, we dropped about 88% in the second quarter compared with the national average. 

These results are not that surprising to me. This “not my house” syndrome is partially to blame for the really high housing inventory in Bend. I showed property for 3 days in a row in the $250,000 – $350,000 price range. My clients found a house they liked but it was, unfortunately, overpriced by about $30,000. That’s huge in that price range! We made a low offer but the offer was still higher than market value for the neighborhood. The sellers turned it down. We didn’t even receive a counter offer. About 1 month later the listing agent called me to see if my buyers were still interested but they weren’t. The house has since been taken off the market because it didn’t sell. If we as agents could convince these sellers not to list their overpriced homes in this market and instead, wait for values to return to the seller’s perceived value, our inventory would be much more manageable. I think buyers are overwhelmed right now. They have paralysis from over analysis.

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5 comments

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