House Comps: It’s All About the Pricing

The most common mistake we see with home sellers is not pricing their homes correctly. This mistake can cause one of two catastrophic outcomes:

1) Pricing your home too low and leaving money on the table OR  2) Pricing your home too high and watching it sit on the market with no real interest.

Properly analyzing the comps (comparable sales in your market) is the best way to determine your price. Remember, the greatest focus with comps should always be on SOLD listings because active or pending properties could sell for a lower value and skew the numbers.

What are Real Estate Comps?

Real estate comps, short for comparables, are recently sold properties that are similar to the property you are looking to buy or sell. They serve as a benchmark to help determine the current market value of a property. By analyzing the sale prices of these comps, you can make an informed decision about the listing price or offer price of a property. Real estate comps are a crucial tool for determining a home’s value, and they are used by real estate professionals, including real estate agents, appraisers, and lenders. Understanding and utilizing real estate comps can give you a significant advantage in the housing market, ensuring you set a competitive and realistic price.

Here are a few tips to avoid a pricing disaster:

1) Remember to look at your property and real estate comps, not just your house.

If you are on a lot that faces challenges (located right next to a busy street) as compared to others in the neighborhood with very desirable lot locations (cul-de-sac, large corner lot, park adjacent) you need to be very careful if you are using them as comps.

Helpful Tip: try to find other properties with similar challenges to yours and analyze them. If they are not comparable to your home, compare them to other similar properties and determine what percentage of the price had to be discounted to overcome that challenge.

2) Try to stay in the same neighborhood.

Many sellers will reach out too far to find a property that will justify their price. Buyers are not doing that. They are comparing your home or property to others in the neighborhood using real estate comparables. No buyer will take you seriously if you are picking and choosing your comps from different neighborhoods miles away.

Helpful Tip: If there are no comps in your neighborhood and you do have to venture out, remember to find a neighborhood offering truly similar homes. Year built, style and finishes are all important when analyzing the comps; the homes you are using should remind you of yours.

3) Number of stories is very important for comparable sales:

If your house is a two story, you should be looking at other two stories if at all possible. One story homes tend to have a larger buyers pool and different stats as compared to two stories in your neighborhood. If you are looking at both, you may be skewing your own numbers. Ensuring you compare similar homes will help you establish a fair market value for your property.

Helpful Tip: Bedrooms location is also very important, specifically the location of the master bedroom. A two story with the master on the main level is historically a more desirable layout for buyers. So if your master is upstairs, try to look at others with the same layout for a truly accurate picture.

4) Pay attention to the finishes to determine market value:

If your home is not updated or remodeled, make sure you are looking at other homes with similar finishes. Updated or “turn key” homes have different stats than homes that are more dated. Also, if you are using found comps with different levels of finishes, you have to make a guess on what the differences in value would be, which is very challenging and subjective.

Helpful Tip: If you renovated your house a decade ago, calling your home “updated” may be a stretch and it won’t be comparable to newly renovated listings.

5) Don’t look at your home through a lens.

Put yourself in the mind of the buyer and always be thinking about what they are looking at. Don’t “reach” and try to see what you want to see. Look at the facts and the hard data and make a practical decision based on the facts.

Helpful Tip: If you are clearly unrealistic with your home’s value, a buyer will not take you seriously and they may not even make you an offer because they don’t feel like you will be a realistic seller. So be practical and you will gain credibility.

Pricing your home can be very challenging, but utilizing these 5 steps will help you employ the same trusted methods as real estate professionals and appraisers. This will lead to a quicker sale, with more qualified buyers, commanding the best price possible. A comparative market analysis can help you set a realistic price based on similar properties in your area.

Finding Real Estate Comps

Finding real estate comps can be a challenging task, but there are several effective ways to do it. One of the best methods is to work with a real estate agent who has access to the Multiple Listing Service (MLS). This service provides a comprehensive list of recently sold properties in the same neighborhood, giving you a clear picture of the market. Another option is to use online real estate websites, such as Redfin or Zillow, which offer information on recently sold homes in your area. Public property records are also a valuable resource for finding information on recently sold properties. Additionally, online tools like PropStream can provide accurate real estate comps and market trends, helping you make well-informed decisions.

Evaluating Comps

Evaluating real estate comps requires careful consideration of several factors to ensure you get an accurate picture of the market. Start by looking at the property’s location, size, condition, and amenities. It’s essential to find comps that are similar to the property you are evaluating. Pay attention to the asking price, sold price, and days on market for each comp. Adjust for any differences in the properties, such as larger square footage or additional features. Consider the market trends and conditions in the area, as well as any upgrades or renovations that have been made to the property. By thoroughly evaluating comps, you can set a realistic and competitive price for your property.

Common Comps Mistakes to Avoid

When using real estate comps, there are several common mistakes to avoid to ensure you get an accurate market value. One mistake is using comps that are not similar to the property you are evaluating. This can lead to incorrect pricing. Another mistake is using comps that are too old or too new, as this can affect the accuracy of the market value. Avoid using comps that have been heavily renovated or upgraded, as this can skew the price. Additionally, relying solely on online real estate websites can be risky, as the information may not be accurate or up-to-date. It’s essential to work with a real estate agent or appraiser who has access to accurate and reliable data to avoid these common pitfalls.

Leveraging Real Estate Comps for Optimal Pricing

Accurately pricing your home is crucial for a successful sale, and real estate comps are an invaluable tool in this process. By understanding and utilizing comps, you can set a competitive and realistic listing price that attracts serious buyers. Remember to consider factors like location, property size, and finishes when evaluating comps to ensure you establish a fair market value. Avoid common pitfalls such as using outdated or dissimilar comps, and consider working with real estate professionals for the most reliable data.

For a seamless experience in finding accurate real estate comps, consider using ListingSpark, a full-service home seller platform. ListingSpark offers a free comparative market analysis to help you determine the right price for your property. Visit ListingSpark’s Free Comparative Market Analysis to get started and leverage their expertise to make informed decisions in the housing market.