So, what’s this house worth, really?

In a booming market like ours, with values rising rapidly, I get a lot of questions about what property is really worth.
Buyers, even causal tire-kickers, are sometimes shocked at Nashville property prices. “I know that neighborhood. Those houses simply aren’t worth that much!” Well, someone is paying that much for them. At some point in the future they may not cost that much, but right now, they do.
Sellers, of course, come at the question from the other side of the fence. Assuming, because the market is hot and everyone thinks everything is overpriced anyway, they can ask a crazy price and someone, perhaps a naïf from “out of town”, will jump on it. Sometimes, that actually happens.
What this comes down to is an absolutely fundamental fact of a market economy: things are “worth” whatever people will pay for them. It’s that simple.

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Before I became a realtor, I spent more than 30 years in the marketing business, helping people sell their goods and services. As a marketer, I operated in all sorts of business lines and geographic markets, but I never experienced as pure an example of supply and demand dynamics as I have in real estate. If people want something bad enough, they will pay whatever it takes to get it. And not a penny more.
So, how do we know what a house is really worth? What should we offer? How much should we ask? 
A few things to consider:
That’s shorthand for comparable sales. We look at comps to work out what a seller should ask and what a buyer should offer. No one can predict the future, but we can be guided by the recent past, and by what’s going on right now. Comps are the best indication of what the market is doing in real time. Realtors use them, and so do appraisers.
Selling? Want a quick sale? Price it just below the comps and hope for multiple offers. Want top dollar? List high and see what happens. (And be prepared to drop the price if nothing does.) Buying? How badly do you want the house? How much is it worth to you? Consider the comps, and offer as much as you can, as soon as you can. (And be prepared to walk away or bring more money to the table if it doesn’t appraise at contract price.)
Know yourself and your bottom line. Know what you want and how far you will go to get it. Then, stay loose but focused, work the angles, listen to your realtor, and get the deal you need and want.