We began our look at 6 mistakes Nashville home sellers need to avoid with problems in setting the price. Today, we’re going to look at another major mistake: overvaluing the amenities. Sellers often put too much faith in the value of unique amenities, such as granite counters, bathroom finishes, high-end appliances and so on when determining their Green Hills home price.
A Realtor had a conversation with a seller about how his home was priced over $200,000 more than a comparable property just down the block. His answer: “Well, I have a sauna in the basement.”
OK, but you can put a sauna in your basement for about $10,000, and it’ll be brand new, without anyone else’s dried-up leftover sweat in it. And this guy was pricing it as a $200,000 value.
He’s not alone. A lot of Nashville home sellers make that mistake. Psychologists even have a name for it — the “endowment effect,” which is our tendency to overvalue things just because we own them.
Amenities do have value, just not enough to make a big difference in price. The old joke in real estate is that value is based on three things: location, location and location. And that’s mostly true.
The biggest factor in pricing a home is location, which is obvious to anyone who has priced out a new home in East Nashville. After that, you look at size — how big is the home? And then once you know location and size, you can pretty much establish a general pricing range. That’s when you start looking at all the other aspects of the home: style, condition, lot quality — and the amenities.
So amenities are important because they can change where you are in that range. But they don’t move you up to a new one.