Are Homeowners in denial about the value of their properties?

It seems that homeowners, especially those who bought their houses at the peak of the real estate surge, are still having trouble accepting just how much the values of their properties may have fallen. See the new report from the real-estate site Zillow.

Existing sellers who purchased their homes in 2007 or later, in an analysis of the site’s home listings, shows sellers may be overpricing their properties by about 14 percent.

Sellers who bought their houses just before the real estate bubble, and those who bought during the big run-up in home values, also are overpricing their homes, but not by as much. It appears those people who bought before 2002 are pricing their homes roughly 12 percent over market value, while those who bought between 2002 to 2006, have priced them an average of about 9 percent over current market value.

Zillow compared the asking price of one million homes for sale to the homes previous purchase price, then factored in the change in the Zillow Home Value Index for the respective ZIP code,

Sellers should consider comparable sales and asking prices in their market when setting an asking price for their houses. Factoring in what they paid for their home, or how much they owe on their mortgage, may lead to erroneous conclusions. The market determines whether a buyer is interested in your house. Essentially, a buyer doesn’t care what was paid, or what is owed on a mortgage.

Certainly, sellers who owe more than their house is worth are limited in how low they can price their home because selling for less than their mortgage means they’ll have to negotiate a short-sale with their bank. No one wants to realize a loss, but buyer’s and the market dictate prices.  

The bottom line, review comparable sales from your Realtor and listen to their suggestions on pricing.  They know the market conditions and values in your neighborhoods. 

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