As a seller in a buyer’s market, pricing your house correctly from the get-go is the most important thing you can do. But as Zillow’s latest research and survey data show, sellers have varying ideas of what constitutes a realistic asking price depending on when they bought their home.
Zillow recently compared the asking price of 1 million for-sale homes with those homes’ previous purchase price, then factored in the change in the Zillow Home Value Index at the ZIP code level to determine the home’s current market value.
We found sellers who bought after the housing bubble burst, in 2007 or later, price their homes 14 percent above market value. Those who bought before the housing run-up, prior to 2002, overprice by nearly 12 percent. Somewhat surprisingly, sellers who bought during the run-up, from 2002-2006, seems to be the most realistic, pricing their homes 9 percent over market value.
In a separate survey of homeowners who plan to sell their homes within the next four years, Zillow found that those who purchased their home post-bubble are more likely than bubble and pre-bubble buyers to base their asking price on the original purchase price of their home, with 17 percent saying the purchase price would be the primary factor in that decision. Unfortunately, home values have declined every year since 2006 and are back to 2003 levels, so if a seller is pricing their home based on the amount they paid in 2007, that’s likely too high of a price.
Now of course not every home that was purchased in 2007 or later is dramatically overpriced. But this data definitely underscores the need for sellers to research what has happened in their local market since they first bought their home, whether it was four years ago or six months ago.
Visit the Zillow Research page for more on our methodology and analysis.