One of the most difficult things for sellers to do is come up with the right asking price for their castles -- one that will net them the most money, without the house laboring on the market for far too long.
Real estate agents are often helpful when it comes to pricing. But while many work with their clients to set the "right" number, others suggest too high a price in hopes of securing the listing, only to later tell the sellers they aimed too high.
Other agents suggest too low a price in the hopes that the place will sell on its own merits without much of a marketing effort on their part. In other words, so they can nab a quick commission.
Owners are sometimes culpable, too: Thinking their homes are the best on the market, bar none, they delude themselves into believing their places will fetch top dollar. Or, whether housing prices in their neck of the woods are rising, falling or just plain stagnant, they believe their homes are worth more than they really are.
According to a study set for publication in the Journal of Housing Economics, for example, owners tend to overvalue their homes by an average of 8 percent. Those who bought during the 2004-2006 boom years overestimate their home's value by even more: as much as 12 percent.
Whether with their agents' help or on their own, the study said, "homeowners systematically overestimate the value of their homes."
But soon, sellers will have a new Web-based pricing tool at their disposal. The program won't tell you what price to ask, but it will project with uncanny accuracy whether your home's value will be rising, falling or remain unchanged.
Currently, you can use the static and dynamic maps developed by Weiss Residential Research in Natick, Massachusetts, to chart how values have changed in your neighborhood over the last 12 months, and what they are likely to do in the next 12 months.
Soon, says founder Allan Weiss, you'll be able to do the same for your specific house.
The maps work like this: Go to weissindex.com and type in your ZIP code. (Note: Due to local disclosure laws, data is currently unavailable for 12 U.S. states.) A map of that area will pop up on the screen with a color-coded dot representing every house. A green dot means the price for that house has been rising; a red dot means its price has been falling.
Now, run the cursor over the years at the bottom of the screen and you'll see a historical perspective. If you see all green for several years and then some red, it means there's potential for a downturn. But if you see all red for several years and then some green, a possible upturn is in the offing.
These mini-indices are based on repeat sales and show changing values 12 months into the future for 100 major metropolitan areas and some 6,000 ZIP codes.
But Weiss has recently increased the database to include nearly 100 million residential properties throughout the country, making it possible to create similar indices for each of those houses. Within a few months, he promises, you'll be able to do the same for specific houses by typing in addresses.
The maps will not only show what the value of that house has been for the past few years, but also what its worth is likely to be over the next 12 months -- not a specific price, but rather a trend line.
The Weiss Residential Index is free to use, and Weiss vows it will never be used as a lead-generation tool for agents or lenders. The site will instead be subsidized through his agreements with others portals.
The name Weiss may sound familiar. He was CEO of Case Shiller Weiss, and was instrumental in bringing the popular and widely quoted Case-Shiller housing barometer to market. Case-Shiller shows how house values have changed over the previous 12 months in 20 major markets and dozens of smaller ones.
But that rear-looking index was unable to predict the 2008 housing market crash that sent values plummeting. That's when Weiss said he "knew something was wrong."
"It didn't help people recognize the crash," he said. "And it didn't show that even during the worst of the crash, some homes declined less in value than others, and some even appreciated. Nor did it show that some neighborhoods experienced downturns sooner than others."
The index he helped create was useless, says Weiss, who sold his share of the Case Shiller Weiss business in 2002. "People don't own their entire market. They own one house, and everyone needs their own index."
So he set about building a new index -- one that not only looks backward, but also forward. And over the last five years, he and his staff have developed tools that could possibly forewarn of never-before-seen market movements.
"Weiss maps show waves of value changes moving across a geographic area like a weather event," he explains. "New trends can be discovered, new sub-markets defined, compared and ranked, and better decisions made."
The maps can be helpful for buyers as well as sellers. Say, for example, you are considering two similar $400,000 houses you like equally. But one's index is rising, the other's is declining, and the forecasts show each trend is likely to continue.
So which place are you going to pick? Armed with the information from the maps, the decision is relatively simple.