The Home Seller’s Guide to Understanding Comparable Sales
Forget finding a real estate agent, working on renovations, and home staging: Choosing the right asking price may be the hardest part of selling your home.
If you’ve done your research, you know that not just any number will do: If you overprice your home, it will sit idle on the market, and if you underprice it, you’ll miss out on cash and equity that could’ve been earned in the sale.
So think like a buyer and scope out other homes that are for sale or have recently sold in your neighborhood.
But before you head out the door and start comparing your home with the rest of your neighborhood, heed these tips when looking for comparable sales.
1. Compare apples to apples
Analyzing comps entails some detective work, since chances are, your house isn’t exactly like every other on the block. Wade through the comparable homes and find one that is most like yours. Then use the following list to make note of what similar homes have that yours doesn’t, and what your home has that others lack.
Square footage This is significant for most buyers. When it comes to pricing, the bigger the property, the bigger the price tag.
Age and condition Newer homes don’t necessarily command higher prices (neither do vintage ones), but condition relative to age does factor into price. When you compare your home with others, stay within a five-year range.
Number of bedrooms and baths How many your home has — and where they’re located — can radically change the price.
Amenities The more perks you have, such as walk-in closets, a pool, spa, gourmet kitchen, and so on, the higher the price.
Lot size The exact acreage of your land correlates to price. When you compare your home with others, stay within 0.5 acre.
Condition A teardown, a fixer-upper, updated, or pristine — the condition of your house can be a deal maker or a deal breaker. Pay close attention to other homes’ upgrades to make a fair assessment of how they affect value.
Location This factor is multifaceted. It relates not only to your state, city, and neighborhood but also to where your house sits on the street. Does it face an eyesore or busy intersection? Does it have a view? Does it get nearby freeway noise or sit on the bank of a tranquil lake? Don’t forget to take these location nuances into consideration.
2. Don’t look back (too far)
The price of your home today can’t be compared with the selling price of your neighbor’s identical home six months ago. If you’re looking at comps further back than three months, dump them. Your house could be worth more. In fact, in some of the fastest-sales-pace cities, such as New York, Miami, and San Diego, homes move so rapidly that sellers should look only at the prior 60 days of sales, if possible.
3. Go online and check prices
Research what homes have recently sold for in your neighborhood.
TIP: Visit Trulia, search by your ZIP code and select “sold” from the giltes menu. Just be sure to think of the info as a ballpark guide — not an exact number.
4. Check out the competition in person
Ask your real estate agent to recommend homes you should drive by or open houses you should attend. It’s important for you as a home seller to know what’s out there. Find out up close and in person how your home stacks up against the competition.
5. Study list vs. sale prices
The difference in percentage between list prices and actual sale prices for the homes in your neighborhood speaks volumes about the current real estate climate. This number strongly indicates which direction the market is moving in, and it will suggest how much under — or over — your ideal asking price you can expect to get for your home.
Anyone can throw a house on the market at a high price. But the number you want to look at closely is the sale price of the home, which is much more indicative of the actual value.
6. Know what’s not selling
You can learn a lot by observing not only what is selling nearby but also what’s not selling. Is a home that initially looks like a comp really overpriced for what it offers? How does it compare with your house? What is it lacking that yours isn’t? Once you identify why it’s not selling at its current price, you can avoid the same mistake when determining your own home’s price tag.
Are you a home seller researching comp’s in your area? What methods are you using? Did you previously sell your home? What did you learn about the importance of proper pricing? Leave your feedback in Comments, on the Patrick Parker Realty Facebook or Twitter pages and don’t forget to sign up for the monthly Patrick Parker Realty eNewsletter for more articles like this delivered straight to your inbox.