Michael Edlen: Understanding Your Home’s Worth

By Michael Edlen
Special to the Palisades News

If you live in Pacific Palisades or nearby, your home’s value is higher now than it has ever been. We are at the ninth year after the previous market peak, and once again the levels reached are much greater than the previous highs.

This marks the fourth such cycle in the last 40 years, and time will tell whether history will soon repeat itself or not. That being noted, it is useful to observe that the market value of your home is NOT any of the following:

  • What you want it to be or feel you financially need it to be;
  • What you have invested in it or how much it is insured for;
  • What you heard a neighbor’s house sold for;
  • What some other nearby homes are currently listed at; • What Zillow or other online automated valuation systems say it is; Or what it was appraised for when refinanced.

The true market value of your home is what a buyer is willing to pay, based on:

  • Today’s market in general;
  • Today’s competition in your area;
  • Today’s economic condition and financing rates; • Your property location and setting;
  • Buyer’s perception of your home’s condition;
  • Showing accessibility and appearance;
  • And how effectively it is marketed and negotiated.

Here are several things to keep in mind about a property’s value:

  1. There is almost as much an art as there is a statistical side to evaluation of homes in areas such as the Palisades, where there is such a tremendous diversity even on the same block.
  2. The estimation of value can have a variance of accuracy that at times is startling, and often due to seemingly inconsequential things. For example, if an owner is unable or unwilling to invest the effort to de-clutter and thoroughly clean their home up before photography is done, it can easily result in a sale that is 5-10 percent lower than it might have been.
  3. It is often and understandably challenging for homeowners to objectively observe their own property. Therefore, they may not recognize things that might trouble or be of concern to a potential buyer. For instance, cracks in the driveway or exterior stucco, dry-rot-damaged fascia boards or overgrown shrubbery may detract from the appeal of the property. That’s why it’s always helpful to enlist a seasoned real estate agent and experienced good friends to come by and point out potential flaws in and around the property that may be off-putting in the sales process.
  4. One common mistake owners make is listing their property too high. Of course, the seller can set a price point at whatever they choose to, with the idea that they are open to negotiation. However, if it is priced more than 10 percent above probable market value, it is possible that the best buyers may not even look at the property, leaving no opportunity to negotiate.

Pricing too high can lead to a longer time on the market, which in turn leads to a market perception of lower value. Buyers often ask how long the property has been on the market and come to conclusions of value based on that alone.

Without a well-reasoned strategy based on actual market conditions and comparable sales, a real estate agent may suggest or agree to list the property at a price point that the marketplace will not support.

Michael Edlen has evaluated more than 3,000 properties. To find out what your property may be worth today, call (310) 230-7373 or Michael@MichaelEdlen.com.

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