There are many home pricing myths that seem to continue year after year – despite our best efforts to dispel them.
You can hear these myths repeated by seemingly some of the most trustworthy people. Like overpricing your home to make more, or adding every improvement to your sale price.
But they’re dead wrong. And by following them, you could actually hurt your chances of a sale at top dollar.
Here’s the start of our series debunking these myths for the misinformation they are. We’re going to start with one of the worst…
Home Pricing Myth #1: You Always Make Money
I’ve spent a majority of my career in various investment related industries. I’ve even penned stock picking newsletters and services. So the biggest point I can make here with that kind of experience is that real estate is an investment. Your home is an investment.
And all investments can lose money. It’s just that simple.
Sure, real estate tends to appreciate over time. The National Association of Realtors® (NAR) estimates that nationally, home prices will jump 5% by the end of 2017. Moreover, that they’ll continue rising another 3.5% in 2018. In Maryland, our average prices have crept up by 4.0% in 2017. Some counties like Dorchester and Talbot even saw increases over 10%.
That’s great, but it’s not a guarantee you’ll sell your home or more than you paid.
Your return on investment can vary greatly based on where you live. Like in Allegany county where home prices actually dropped by 0.2% last year. The NAR found, for instance, that the cost of single-family homes increased in about 87% of the metros it studied. but prices actually dropped in 23 markets.
Buy Your Property ‘Right’
When I was a Licensed investment Advisor I would counsel clients on stock purchases and timing. My short advice was always to “buy it right.”
If you buy an investment at a low point in the market, you’ll be more protected if the market should fall. Unfortunately, we mortals rarely know when we’re at a low or if we’re near a high. Ask anyone who purchased a home in 2006 or 2007. Many of those homeowners are either just barely positive in their equity or still slightly underwater.
The Central Maryland home market has made great strides over the last decade. But if your home lost 30-40% in value in 2008-2009, it’s going to be hard to undo that damage. Imagine we could go back in time to talk to those buyers. I’d guarantee that those buyers would have told you that they weren’t buying at the high.
Now the difference for most investments, is that you can’t sleep under your bonds. You won’t protect yourself from the cold with stocks. But you can live there, raise a family and enjoy your property. It’s what makes a home a good investment even if there is a loss involved.
So in review; like any investment, there is always uncertainty, risk and the potential for reward. But a return on your investment isn’t guaranteed – you don’t always make money.
So don’t assume you’ll walk away with a profit.
The professionals at Wissel Homes know the Central Maryland market because it’s our home too. We live and breathe the local neighborhoods in Howard County, Carroll County, Baltimore County, Anne Arundel County and more. We understand what it takes to get the job done right. Contact us today to set up an appointment to list your home or to start the home buying process. Let our experience help move you into your dream home.