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How to Use Comparable Sales to Price Your Home

MLS property and homes for saleBefore you decide to list and sell your home,  we will use information from current comparable sales to accurately price the property.

By knowing the value of similar homes, called comparable sales (or in real estate lingo, comps), you will be armed with the best idea of the current estimated value of your home. One of the most important factors is finding sales comparables that closely match your property.

What makes a good comparable sale?

Your best comparable sale will be as close to your house in close proximity and it closed escrow quite recently.  If you can’t find that property (which is often the case these days),  here are a few other key factors that count:

Location: The closer the comparable to your house the better.  However it’s not smart to use just any comparable sale within a mile radius.  A good comparable sale is a house in your neighborhood, your development and/or on a similar street as your house.

Home type:  We look for comparable sales that are like your home  and similar in style, construction type,  equal square footage, number of bedrooms and baths,  finish quality and lot square footage.

Amenities and upgrades:  Has the home been improved or remodeled?  Does the comparable sale house have air conditioning or radiant heat?   Are there extra features like a large deck or patio?  Extra garage or storage?  If a condo or townhouse does the property have the same amenities (pool, workout room, walking trails, etc)  How do the homeowners association fees compare?

Date of sale: You may be inclined to use comparable sales from two years ago when market conditions were much different, but that won’t do you any good.  Many buyers use government-guaranteed mortgages, and those lending programs often require that comparable sales be no older than 6 months, although these days those time frames are being stretched because nowadays we are having a hard time finding recent comps.

Sales sweeteners:  Did the comparable deal offer buyer down payment assistance,  shared closing costs, or a free flat screen TV?  Comparables  need to be adjusted in order to be “apples to apples ” comps.  Agents can help adjust price based on insider insights.

Regardless if you live in a subdivision where most of the properties are fairly equal, your home will always be different from your neighbors’ even if in the smallest ways.  Considering those differences—like the fact that your home has one more bedroom than the comparables or a basement office—is one of the ways real estate agents add or detract value.

Typically, a busy agent has been inside many of the homes in your neighborhood and probably knows all sorts of details about comparable sales that have recently occurred.   They will have read the comments the selling agent put into the MLS, seen the good, bad and ugly, and heard what other Realtors, lenders, closing agents, and appraisers said about the 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.  Next, put your comparable sales into two piles: more expensive and less expensive.  What makes your home more valuable than the cheaper comparable sales and less valuable than the more expensive comparable sales?

Can we use foreclosures and short sales as comparables?

If one or more of your comparable sales was a foreclosed home or a short sale (a home that sold for less money than the owners owed on the mortgage), ask your real estate agent how to treat those comps.

Often times a foreclosed home is not in good condition and have deferred maintenance and possibly damaged or removed fixtures.  If your home is in great shape, it stands to reason that the foreclosure should be priced less than your home.

Short sales are usually in better condition than a foreclosure, although they are still distressed sales.  How much short sales are discounted from their market value varies among local markets.  Locally, we are seeing discounts between 10% to 15% compared to non short sale homes and property.  So, around Sun Valley, Ketchum and Hailey, you have to rely on your Realtors knowledge of the local market to use a short sale as a comparable sale.

For all the information you need to know give Coulter Properties a call today.

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