Comprehensive Market Analysis: Part 2 of 8 - How To Effectively Price Your Home For Sale

How do Realtors "Comp" homes? - Comprehensive Market Analysis:

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There's no shortcut answer to this complex topic, but as I stated in my post, "How to Effectively Price Your House for Sale", each of these pricing topics are dynamic enough to get into much greater detail.  This post will cover the 1st point of that post:

 "Current Market Data or "Comps."

Agents, appraisers, and the like arrive at a... 

• "Comps" (Comparable Properties)
• "CMA" (Comprehensive Market Analysis) or
• "BPO" (Broker's Price Opinion) 
• An accurate estimated market value of a subject property

...in their own way.  Varied backgrounds, many or few years of experience, local area expertise, prior mentors and coaches early in their careers, and many other factors created the way each of us arrive at what we believe actual market value of a home may be.  Market Data is a crucial element.  Keep in mind that how this data is drawn can change the results quite a bit.  Below are some commonly used criteria.  Also, please remember that all of this information is completely dependent upon the location, the property, and the unique market condition.

• What has recently sold?
•  Look within your community or development.
• Look within a particular distance of the subject home; 1/2 mile, 1 mile, 5 miles, depending on the area.
• What is pending? 
• Pending on its own is irrelevant.  Right now, in Brentwood, I know a home that has an asking price of $300k.  It's pending at over $400k.  However, the actual "Sold" price won't be known until it is marked "Sold" on MLS.  Just because it's "Pending" doesn't mean anything other than there is a willing buyer and a willing seller at ??? price.
• What is active?  
• Active homes are relevant in the sense that if a "Like" property (objective) is Active, is in sale-ready condition, and has been on the market for a long time (relative to market trends) it may be priced too high.  If a like home is in like condition and went pending in "0" days, it was probably under priced. SOLD is actually concrete data.
• Data is science.  
• Market data is math; it's that simple.  A home sold for $500,000 and is 2,500 square feet.  It sold for $200/sq. ft.   27 similar homes over the last three months were active for an average of 16 days before they entered into contract.  This is data.  It's just math.
• How you pull that data is art.  
• Make sure that you're pulling "Comps" as a buyer would, not as a means to secure the highest price for your home.  Any agent can doctor the statistics to show a higher or lower sales price.  The honest way to do it is to pull comps the same way a typical buyer or buyers agent might.  Then, make appropriate adjustments to the price based on features such as condition, a view, a pool, updated and upgraded features, etc.
• A like home in a like area, in like condition may have an extra bedroom, or one less garage, or 275 additional sq. ft. This might raise or lower the price/sq. ft.  It might.  I do know microclimates where the size and number of bedrooms have very little to do with the sales price, but the location does.  I do know areas where ever home is virtually the same except for the size, number of bedrooms, etc., and these differences are the only thing that increase or decrease the price.
• Don't overlook what Didn't sell!
• Sold/Pending/Active doesn't include what expired or was cancelled.  These listings expired or were cancelled for any number of reasons: Gainful employment, reconciliation, over-priced, lost opportunity, change of heart, etc.  If there are like homes that didn't sell it is worth asking your agent to call the listing agent on that property to see 'what happened'.  "The buyer found out that they're putting a railroad 200 feet away from our front door."  Ahhhhh...that changes the whole story.
• Always use a local area expert.  
• Local area experts are intimately familiar with the otherwise unknown hurdles, obstacles, and opportunities.  Leverage that expertise.  It doesn't cost you a penny.  
• Mello roos
• Special Assesments
• HOA Litigation
• Changes in infrastructure
• Addition of city features
• Micro Climates
• ...and seriously COUNTLESS other unique circumstances that will directly affect the marketability of your home.

As always, I'll leave you with this tip:

Are you going home shopping this weekend?  Have your agents bring their phones!  CALL EVERY LISTING BEFORE YOU GO!  Properties are moving so quickly...half of your list may be gone before you leave your second viewing.  Agents are getting very  sloppy in updating their listings from Active to Pending, or from Pending Show for Backups to Pending.  This can waste a massive amount of time...and ultimately cause you to miss the house that IS actually still for sale.  

Until next time, and thank you in advance for remembering me when the topic of real estate arises.

Andy Blasquez ~ The last Realtor you'll ever need to look for.
DRE# 01826135

www.andyblasquez.com

Email me at andy.blasquez@gmail.com
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