I have a friend of mine that decided to sell his house with a national i-buyer franchise when the real estate market was going up. His logic was that he would skip the Realtor hence allows him to save money. After all, the market has been going up for several years, right?
Well not anymore.
Market has been shifting to favor buyers and we can feel it. Overall when a house is listed above 800k in the San Diego Market and when that property is priced above the market price and there are multiple similar properties listed at the same time.
After 8 months of trying to sell his property on his own (and he living in Las Vegas and owning a property in San Diego); his place still have not sold. No open houses have taken place, no price decrease, pictures are not professional among some other factors… Does this sounds familiar to you?
We sometimes forget that, is spite of the Trulia and Redfin, etc, etc; Real Estate is very local and unique and the market local knowledge is the Realtor’s competitive advantage. 9 out of every 10 houses are sold with an Agent, due to that particular reason.
Real Estate Comps:
So how do you identify the best comps? Stay as unbiased as possible. Try to set aside your emotional connection to your home and focus on the facts.
How sellers use real estate comps
Even if you’re selling your home with the help of a real estate agent, you’ll want to be familiar with comps so you can make sure you’re comfortable with the listing price your agent recommends.
Only use sold homes
Ignore homes that are currently for sale or pending. Why? Sellers can overprice the home and then end up settling for much lower. Or, sellers can price below market value in hopes of drumming up multiple offers. Until a home sale closes, you’ll never get an accurate read on its value in your local market — it’s only worth what someone ends up paying for it!
Pay attention to the type of home
If your home is a single-family home, don’t compare to townhouses or condos. If you’re pricing a condo to sell, don’t compare it to anything but other condos.
Hire an appraiser
Not sure you’ve found the right listing price? Consider hiring a professional appraiser to give you an unbiased appraisal of your home’s value. The cost is usually between $400-$500, which can be money well-spent for an accurate listing price, especially if you live in a competitive market or you’ve made many renovations and aren’t sure how they should affect your price.
Depending on your situation, this could be an effective strategy – or not.
Have more questions on how to set a proper price?
How buyers use real estate comps
Buyers reference comparables to decide how much to offer on a home. More specifically, they want to make sure they don’t overpay for the home they’re buying.
How appraisers use real estate comps
When an appraiser comes to your home, they will source their own comps to help accurately assess how much your home is worth. Appraisals can happen for a couple reasons. Usually, a buyer’s lender will require an appraisal before closing, but sometimes sellers get an appraisal to help them accurately price their home.
How real estate agents use MLS comps
Real estate agents use comps from the local multiple listing service (MLS) to create a comparative market analysis (CMA). It’s a collection of nearby comps, put together to help an agent and seller decide on a good listing price. Savvy real estate agents regularly run comps (even when not tied to one particular deal) to keep an eye on their local market and gauge overall trends.
What to consider when finding real estate comps
Aim to find at least three similar homes that meet the following criteria:
- Location: Limit your search to a quarter- to half-mile from your home.
- Time frame: Only include homes that have sold within the past three to six months — or less if your market is changing quickly.
- Size: Try to stay within about 300 square feet of your home’s size.
- Bedrooms/bathrooms: Include homes with the same number of bedrooms and bathrooms as yours.
- Condition of home: Factor in things like recent renovations, updated interiors or outdated features.
- Age of home: Homes built around the same time as yours will be the most accurate comps, because major systems like roofs, HVAC and plumbing should be in similar condition.
- Nearby features: Find homes that align with yours in terms of walkability, shopping/retail, waterfront proximity, views, public transportation access and school ratings.
- Price per square foot: Real estate agents use price per square foot to identify comparables. Divide the sale price of a home by its square footage, then compare that number to your own desired price per square foot.
Have more questions on how to find comps and/or set a proper price?
Call me and I will be glad to set an appointment and help you sell your place or find you a great place,