Sell Your House for Top Dollar!
Use the Real Estate Comps! Whether you are selling your house, or looking at a house that you are interested in buying, understanding “The Comps” is an important part of the process.
If you use comparable sales data correctly, you will know that you are selling (or buying) your house at an appropriate price!
Price Your House Right! Some agents will inflate the value of your house just to get your listing! Listing with that agent will NOT be in your best interest! (Click Here to find out why!) Pricing your house correctly will help to insure that your house sells for TOP DOLLAR!
Economics 101: Ultimately, the market will decide the correct sale price for your house. It is best to list your house at the correct price from the beginning!
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By: Carl Vogel – HouseLogic
Before you put your home up for sale, use the comparable sales data to find the perfect price.
Knowing how much homes similar to yours, called comparable sales (or in real estate lingo, “The Comps”), sold for gives you the best idea of the current estimated value of your home. The art is finding sales that most closely match your property and using the sales data to accurately price your house. 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. (Your real estate agent should show you the comparable sales that are the most relevant for your house. –TB)Home type: Try to find comparable sales that are like your home in style, construction material, square footage, number of bedrooms and baths, basement (having one and whether it’s finished), finishes, and yard size.Amenities and upgrades: Is the kitchen new? Does the comparable sale house have full A/C? Is there crown molding, a deck, or a pool? Does your community have the same amenities (pool, workout room, walking trails, etc.) and homeowner’s association fees?Date of sale: You may want to use a comparable sale from two years ago when the market was high, but that won’t fly. Most buyers use government-guaranteed mortgages, and those lending programs say comparable sales can be no older than 90 days. (We are in a very active market. It is important to use and understand the comps that are available. –TB)
Agents can help adjust price based on insider insights
Even if you live in a subdivision, your home will always be different from your neighbors’. Evaluating 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 value.
An active agent has been inside a lot of homes in your neighborhood and knows all sorts of details about comparable sales. She (or he) has read the comments the selling agent put into the MLS, seen the ugly wallpaper, 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 and then listen to him or her without taking the criticism personally. (A good agent will ALWAYS give you their honest opinion about your house. – TB)
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 pricier comparable sales?
Are foreclosures and short sales comparables? (A great question! – TB)
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.
A foreclosed home is usually in poor condition because owners who can’t pay their mortgage can’t afford to pay for upkeep. Your home is in great shape, so the foreclosure should be priced lower than your home.
How much short sales are discounted from their market value varies among local markets. The average short-sale home in Omaha in recent years was discounted by 8.5%, according to a University of Nebraska at Omaha study. In suburban Washington, D.C., sellers typically discount short-sale homes by 3% to 5% to get them quickly sold, real estate agents report. In other markets, sellers price short sales the same as other homes in the neighborhood.
So you have to rely on your REALTOR’s® knowledge of the local market to use a short sale as a comparable sale. (Good advice! -TB)