Before you put your home up for sale, it is essential to use the right comparable sales to find the perfect price.
Knowing how much homes similar to yours sold for, called comparable sales (or comps), gives you the best idea of the current estimated value of your home.
- What makes a good comparable sale?
Your best comparable sale is the same model as your house in the same subdivision—and it closed escrow last week. If you can’t find that, here are other factors that count:
Location: The closer to your house the better, but don’t just use any comparable sale within a mile radius. A good comparable sale is a house in your neighborhood, your subdivision, on the same type of street as your house, and in your school district.
Home type: Try to find comparable sales that are like your home in style, construction material, square footage, number of bedrooms and baths, finishes and yard size.
Amenities and upgrades: Do the comparables have A/C? Is there a pool? Does your association/community have the same amenities (i.e., pool, workout room, walking trails, etc.) and homeowners association fees?
Date of sale: You may want to use a comparable sale from years ago when the market was high; however, this is not a comparable. Most buyers use government-guaranteed mortgages and these lending programs state that a comparable sale can be no older than 90 days. Remember, the appraiser will be following these guidelines as well and lender will not lend above the appraised value of a property.
Seller concessions: Did the comparable-sale sellers provide the buyers with down payment assistance or closing costs? You have to reduce the value of any comparable sale to account for any seller concessions.
- Agents can help adjust price based on insider insights – Use their knowledge and experience!
Even if you live in a subdivision, your home will be individual. Evaluating differences (i.e., an additional bedroom or bathroom, a pool) is one of the ways a real estate agent adds value.
An active, full-time agent has viewed many homes in your neighborhood and is able to provide insight about comparable sales. Your agent has read the multiple listing service and works actively with other REALTORS®, lenders, inspectors and contractors to understand what is and is not a comparable sale.
- More ways to pick a home listing price
If you’re still having trouble picking out a listing price for your home, look at the current competition. Ask your real estate agent to be honest about your home and the other homes on the market (please listen with an open mind. Remember, your agent is here to help you! You are their client and your agent has your best interests in mind).
Next, put your comparable sales into two piles: more expensive and less expensive. Ask yourself, “What makes my home more valuable than the cheaper comparable sales and less valuable than the pricier comparable sales?”.
- Are foreclosures and short sales comparables?
If one or more of your comparable sales was a foreclosed home or a short sale, speak with your real estate agent about how to treat those comps. The current market still holds many short sales and foreclosures and not all are in poor condition. A standard sale does not necessarily sell for >10% than a short or foreclosure. Especially if inventory is low and if you live in a desirable area.
Bottom line, your agent is here to help you. Use their expertise and speak with them about the best course of action for you.
Excerpts from Houselogic.com