Find out what properties like yours have recently sold for in your area of town. In residential real estate, this is called a “comparative market analysis” or CMA. In commercial, you’ll do a “market study”.

It pays to price accurately, because your price signals the market about how realistic you are as a seller. Your price will also determine how long you sit on the market. If you over-price, be prepared to sit there.

It pays to understand what is and is not comparable to your property. Let’s use your home as an example. The more similar your home is to a property you compare it to, the better “comp” (comparable) the other property it is. It will be more persuasive in arguing your home’s value. Choosing “comps” is a big part of pricing a home to sell it.

Let’s say you live in a 2,800 square foot home with a Diamond Devco “Island Aire” floorplan. It has these features:

In the northern part of town
In Blue Sky Subdivision
Built in 1998,
On a 60’ x 130’ lot,
Directly next to a busy street, and
3 bedrooms and 2 bathrooms.
It does NOT have a swimming pool, but the yard is fenced.

We know that your friend just listed her home with the exact same floorplan for $800,000, but she lives in a completely different area of town, and we will ignore it. Why??? Her home is:

Not sold
In the southeastern part of town
In the Ocean View Subdivision
On a cul-de-sac
Built in 2001
On a 60’ x 100’ lot, and
It does have a swimming pool.

Your friend’s home might have the exact same floorplan, but she lives in a different area of town, her home is newer, and while she has a smaller lot, she does have a swimming pool, which also gives her an upward bump in value. Also, she has not yet sold her home. The market will tell what her home is worth in her market when we see what a buyer agrees to pay for it, but we don’t know that until it sells.

We are over-simplifying, and there is a lot more of a science to choosing comps, but generally, we look for:

Properties in your subdivision or neighborhood (even better if they are on your street).
That have sold within the last year
With a similar size, similar age and similar size lot
With similar features

We do look at properties that are listed but have not yet sold, but only to set our sales expectations. If comps say that the homes like yours recently sold between $500,000 and $550,000, we would expect a similar sale. The market might have moved up a little (like 1% or 2%) if the market trend is upward, so, we’ll give you that. However, let’s say 2 similar homes in your neighborhood were just listed yesterday at $485,000 each. That would indicate a downward trend. Unless your home is far superior, it would be hard to get $500,000, much less $550,000. If you insist on listing high, you’ll sit there for a while. We would recommend pricing in line with other homes that are available to the same buyer in the same area.

Remember - even if you get a contract at a really high price, you will usually face an appraiser who will do what?? Look at the comps! If the comps don’t support your price, the buyer won’t be able to finance the purchase, and you’ll sit with it.

Accurate pricing is an art. We understand that most sellers are mistrustful of agents in this regard. Sellers believe all agents want is a quick sale and price low to the detriment of sellers. Maybe that is true for some bad apples. Normally though, Realtors get a bad reputation for selling out their customers that way. An experienced Realtor who shows you credible market figures and has a well-founded basis for his or her opinion, is actually providing valuable market insight to help you achieve your goal of selling!

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Before You List Anything! Part 1- What's It Worth?!

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