‘One of these things is not like the others’
In the “Wonderful World of Real Estate,” being able to compare is a skill and an art. Depending on how well you can compare, you can create a strong foundation for buying or selling your home at the price you seek. Comparable properties are determined by location, features, current status, square footage, floor plan, year built, and many more categories. There are tools available to help you narrow down what your house is worth, however like all tools, the user determines how effective the outcome will be. The ‘Zestimate’ is a great example of a convenient tool, but due to it being algorithm based, it fails to be able to adapt sufficiently to the flow of every individual market.
My own home is “over-zestimated” by 25k. That’s another story for another time.
To keep it simple:
Buyers need comps to know what to offer….and how to defend their offer in negotiations.
Sellers need comps to know where to set the purchase price….and how to defend it.
Let’s get into a few of the determining factors:
1. Location is your Frenemy.
Location can be your best friend or worst enemy. In a stable market, you won’t need to look far. In a struggling one, you might need a stretcher. Remember that the price of any property is always hinged on the location and the economic value of it’s surrounding amenities. The school districts are a good indicator of how far you should go before turning back, however every case needs to be adapted to, bringing us back to why automated tools (Zillow’s Zestimate) are so inconsistent.
2. Comp Status
The best comps are those of homes that are currently ‘pending’. This shows everyone the most current evidence of what a buyer is willing to pay. Sometimes there are properties that are the exception and demand to be set above the rest, these are diamonds in the ruff that can throw off the robots or inexperienced agents. If there’s more than one, it shows a trend, and is reliable enough to be used as evidence of the current local market.
3. Features of the Home
Evaluating features is sometimes a better measuring stick than comparing prices per square feet. For example; if your home has three ensuite bedrooms on the top floor, then only compare it to such or something similar. The same applies to features such as the view, basement, wine cellars, designer kitchen, etc. This is where the real skill kicks in.
Don’t Obsess, Just Get Started
Being able to trust a good local agent will keep you from obsessing over petty details of each comparable home. Your agent will guide you through and dissect why each comp will help or hurt you. Your local agent will be able to tell you why the power lines above one of the comp homes effected it’s DOM (Days on Market) and ultimately it’s sold price. They’ll be able to show you that one of the comps is next to a fire station and the result of it. In the end all these things affect the bottom line somehow.
I’m more than willing to sit down and go over what your home is worth today or help you submit a calculated offer. Contact me and we can get started down The Yellow Brick Road. Ok, I’m done with the movie references 😉
Other Resources
- The Appraisal: The Villain or Hero of Your Dreams
- The REAL Value of a Strategic Agent and his Marketing Plan
- First-Time Home Sellers : The Ultimate How To Sell Guide
- First-Time Home Buyers : The Ultimate How to Buy Guide
- How to Vet an Agent
- Pros and Cons of Hiring an Agent
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The above article “Lions, Tigers, and Comps?! – The Ultimate Key to Real Estate” was provided by Tanner Johnson. If you’re thinking of selling or buying, I’d love to share more information with you.
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