If you’re considering selling your home in Stockton, you’re probably wrestling with one crucial question: “What is my house really worth?” It’s a question that keeps many homeowners up at night, especially when they need to sell quickly or their home needs significant repairs. The truth is, your home’s value might depend on who you ask – and more importantly, on your specific situation.
Understanding Different Types of Home Values
As a longtime Stockton real estate investor, I’ve learned that home values aren’t as straightforward as they might seem. A home’s worth can vary significantly depending on several factors:
- The traditional real estate market value (what similar homes are listing for)
- The actual cash value (what someone is willing to pay without financing)
- The “as-is” value (considering needed repairs and updates)
- The financed value (what banks are willing to lend)
Why Traditional Market Analysis Might Not Tell the Whole Story
Many real estate agents rely solely on Multiple Listing Service (MLS) data to determine home values. While this can work well for updated, well-maintained homes, it doesn’t always paint an accurate picture for properties that:
- Need significant repairs
- Have been damaged
- Haven’t been updated in years
- Have unique features that make them hard to compare
- Can’t qualify for traditional financing
For example, yesterday I received a phone call from a real estate agent, I’ll call her Sally. She told me she was talking to her sister’s best friend about an offer that I had made on a house that she owned, and that she wanted to discuss the offer with me.
It all sounded reasonable enough, so I bit, with my usual… “How can I help you?
She told me that she had run a Comparative Market Analysis (CMA) for the house and that her research showed that the house was worth considerably more than what I was offering and wanted to know why my offer was so low?
I remembered the house and the owner so I asked her, “Have you seen the house in question?”
She replied that she had and that it needed some cosmetic work inside and out. I was a little surprised by the answer, so I asked her to verify the address because I may have looked at a different house or made a mistake.
She verified the address and I calmly explained that the collapsing front porch was not cosmetic and that it was symptomatic of the entire roof collapsing because it had not had any maintenance since a tree had fallen on it 12 years ago.
I also explained that there were dry rot issues around most of the windows and doors, settling issues and cracks in foundation and the plaster had cracked throughout the house. Not to mention the mold in the bathroom and dry rot under the bathtub and toilet.
I asked; “Can we really compare this distressed house to what you found through your MLS CMA? Did you request any Title Company sales comparisons for houses not sold through MLS?”
Her response was textbook… She replied, “I searched for properties sold and listed in MLS for the past 90 days within a quarter mile of the house and this was the high, median, and low.”
She continued, “I have been in the real estate business for 3 years and I know how to run a CMA and I am really concerned, it sounds like you are trying to steal the house.”
I responded:
“I understand that you think MLS is complete, but what we are comparing are apples and oranges. Had you requested comparable data from the title companies as well, you would have found the houses that were not sold by real estate agents and were not listed on the MLS. You would have found the cash-only purchases as well, and they tell a completely different story and indicate a wide range of market values.”
She insisted that it didn’t matter and that the MLS data was the most accurate and that the title company data was irrelevant.
I responded, “Sally, I understand your concern, but this may be a good exercise for both of us. Maybe we both can learn something and we can help your sister’s friend at the same time. Do you realize that the MLS data is isolated to properties that are only sold by real estate agents?”
She insisted I was wrong. I then asked if she was aware that the data provided by MLS did not include cash only transactions and/or concessions by the buyer to the seller?
So, I asked “If you are convinced that the property is worth considerably more than what I offered, may I ask why you aren’t selling the house for her? If somewhere between the low, median and high is what you think that she can get, why don’t you list it and sell it?”
Her response was priceless… “Peter, I don’t sell these types of houses and the house would never qualify for financing because of the repairs needed and the owner has already told me that she has no money to fix it up. I was just calling you to ask why your offer was so low?”
She continued to tell me that she could sell it for what I offered.
So I said … “Sally, you’ve already admitted that the house cannot be sold conventionally with financing. I bet that you could eventually sell the house and if you did, could you with a straight face charge your sister’s friend a sales commission?”
Without hesitation she said, “Of course I would, I get paid to do this.”
My response was simply… “Now who is taking advantage of whom? Your sister’s friend can sell her house to me, without any fees and commissions and I’ll even pay the closing cost. Why should she sell it through you and pay a commission? How are you going to add value without increasing the sales price?”
There was silence on the other end of the phone.
Sally understood my point, but the real point is that in an industry so vast, with so many markets and niches, no two houses are the same and sometimes the CMA is just a guess. If it weren’t then there would be no reason for some houses to sell in one day and others that sit for a year.
The truth of the matter is that over 40% of all houses listed on the Real Estate MLS do not sell within their first listing period.
The condition of the house and the high prices real estate agents place on the house to buy the listing from the seller is why we have so many expired listings. The truth is that not all houses are created equal and the notion that investors buy properties at discounts is NONSENSE.
Now the rest of the story:
I purchased that house for the amount of my original offer.
There were no inspections ordered, no contingencies, no appraisals and no banks.
I used the same tools that everyone has available to determine the market value of that house in its current As-Is condition.
When the preliminary title report was released it was discovered that the house had $7,384.00 in code violations/liens and an un-permitted garage conversion.
I think that sometimes we forget who takes the risk when purchasing distressed properties, but one thing is for sure I have never stolen a house.
The Reality of Selling a Home That Needs Work
If your home needs substantial repairs or updates, you might find yourself in a challenging situation. Many homeowners face tough decisions when confronting issues like:
- Structural problems
- Roof damage
- Fire damage
- Outdated systems (HVAC, electrical, plumbing)
- Code violations
- Foundation issues
- Mold or water damage
In these situations, the traditional real estate market value becomes less relevant because:
- Banks may not finance the purchase
- Many buyers won’t consider a home that needs significant work
- The cost of repairs might exceed the potential increase in sale price
- You might not have the time or resources to complete necessary updates
Understanding Your Options
When selling your home, you generally have three main paths:
- Traditional Sale: List with a real estate agent, make necessary repairs, and aim for top market value (typically takes 3-6 months or longer)
- As-Is Sale with an Agent: List the home in its current condition, usually at a lower price point (may take longer to find the right buyer)
- Cash Sale to an Investor: Get a fair cash offer and sell quickly without repairs or updates (we can close as quickly as 7 days)
When Might a Cash Sale Make Sense?
A cash sale to an investor could be your best option if:
- You need to sell quickly
- Your home needs significant repairs
- You’re dealing with code violations or liens
- You want to avoid the hassle of showings and negotiations
- You don’t want to spend money on repairs or updates
- You’re looking for a guaranteed sale
How We Determine a Fair Cash Offer
As a local Stockton investor, I look at several factors when making an offer:
- Current condition of the property
- Estimated repair costs
- Local market conditions
- Recent cash sale comparables
- Your timeline and needs
Unlike traditional market analysis, we focus on what your home is worth right now, in its current condition, without requiring any repairs or updates from you.
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If you’re wondering what your Stockton home is worth and want to explore your options, I’m here to help. I’ve been buying homes in Stockton, Sacramento, and Modesto for over a decade, helping hundreds of homeowners find solutions that work for their specific situations.
Whether you choose to list with an agent or explore a cash sale, the most important thing is finding the solution that best fits your needs. If you’d like to learn more about getting a cash offer for your home, call me, Peter Westbrook, at (209) 481-7780.
Remember: The true value of your home isn’t just about market comparables – it’s about finding the right solution for your specific situation.