Today I wanted to reach out and update you on what we’ve been noticing in the Missoula and Ravalli County markets.
For the first time since I can remember, we’ve had four appraisals in 60 days come in below our sales price. That’s a lot like ‘mental appreciation’: What a buyer is willing to pay is outpacing the actual rise in house values.
As a buyer, you really need to look out for that to make sure you’re not overpaying. As a seller, you might hear that the market is so good, but keep it in the back of your mind that the house might not appraise.
For instance, we received five or six offers on one of our properties, and two or three of those offers were over the asking price. We didn’t actually end up going with the highest one because we didn’t think it would appraise. The one we did accept was the best offer that we thought it would appraise for. In fact, it didn’t—it came in about $13,000 to $14,000 below that. For that situation, we had to have another round of negotiations and it is about to successfully close.
"If you keep an eye out on the points I’ve addressed today, you should have a less stressful transaction."
This is the hottest seller’s market we’ve ever experienced. However, if your home is not selling, pay attention to the feedback. It could be that the home is outdated. If a buyer walks into a home priced at $385,000 but the home hasn’t been updated since it was built 20 years ago, would it be worth it to put that much money into the house? Suppose it costs you $50,000 to remodel the kitchen and bathrooms and maybe put down some new concrete: Would the house then be worth $430,000?
If the answer is no, I’d steer clear of that home, as a buyer. That home should probably have been priced around $340,000 or $350,000. That means, as a seller, your home might be priced too high in relationship to the relative age of the home. Watch out for outdated features such as hollow-core doors, brass doorknobs, green carpets, and so on.
Additionally, pay attention to the days on market. The average time a home spends on the market in the Missoula area is about 100 days, and the farther we go down the Bitterroot, that starts to increase.
If you keep an eye out on the points I’ve addressed today, you should have a less stressful transaction.
For any questions or if you’re in need of assistance with buying or selling a home in this competitive market, please reach out to me. We’re always here to help and coach you.