The single most important factor to consider when selling a home is the price tag. Selling a home quickly and for the right price is a balancing act: Price too high and your home could sit losing its freshness, but price too low and you may lose thousands of dollars. The stakes are high! This page explains how Gordon Street Realty can help you make the right decision.
Our Comparative Market Analysis
With this service, we look at all the factors that might influence the value of your property, and come up with a price that’s guaranteed to attract buyers. Our CMA report process begins immediately when requested by a home owner and is prepared by one of our profession real estate agents. The report is an estimate of value for the home to be marketed at when deciding what price to list your home for sale. Home evaluations are done by comparing other like homes in the neighborhood, for those homes currently listed for sale, and recently sold homes. Each market evaluation takes into account any additional amenities, special features, and overall condition.
Often, you will hear your agent speak about the county tax assessment, your homes CMA value is assessed very differently from the way the county tax assessor asses value and a general rule of thumb is the tax assessor value is 20%-40% below your homes true market value . The tax assessed value is that amount in which real estate taxes are based on and not the market value or value someone is willing to pay for the home. A CMA is also different than an appraised value. The appraised value is determined much like a CMA however; it can be and many times are different than the CMA prepared by a real estate agent.
How Pricing Works
Pull Comparable Listings and Sales
- Look at every similar home that was or is listed in the same neighborhood over the past six months.
- The list should contain homes within a 1/4 mile to a 1/2 mile and no further, unless there are only a handful of comps in the general vicinity or the property is rural.
- Pay attention to neighborhood dividing lines and physical barriers such as major streets, freeways or railroads, and do not compare inventory from the “other side of the tracks.” Where I live, for example, identical homes across the street from each other can vary by $100,000. Perceptions and desirability have value.
- Compare similar square footage, within 10% up or down from the subject property, if possible.
- Similar ages. One neighborhood might consist of homes built in the 1950s next door to another ring of construction from the 1980s. Values between the two will differ. Compare apples to apples.
- Pull history for expired and withdrawn listings to determine whether any were taken off the market and relisted. If so, add those days on market to these listing time periods to arrive at an actual number of days on market.
- Compare original list price to final sales price to determine price reductions.
- Compare final sales price to actual sold price to determine ratios.
- Adjust pricing for lot size variances, configuration and amenities / upgrades.
Withdrawn & Expired Listings
- Look for patterns as to why these homes did not sell and the common factors they share.
- Which brokerage had the listing: a company that ordinarily sells everything it lists or was it a discount brokerage that might not have spent money on marketing?
- Think about the steps you can take to prevent your home from becoming an expired listing.
- Since these are pending sales, the sales prices are unknown until the transactions close, but that doesn’t stop anybody from calling the listing agents and asking them to tell you. Some will. Some won’t.
- Make note of the days on market, which may have a direct bearing on how long it will take before you see an offer.
- Examine the history of these listings to determine price reductions.
- These matter only as they compare to your listing, but bear in mind that sellers can ask whatever they want.
- To see what buyers will see, tour these homes. Make note of what you like and dislike, the general feeling you get upon entering these homes. If possible, recreate those feelings of reception in your own home.
- These homes are your competition. Ask yourself why a buyer would prefer your home over any of these and adjust your price accordingly.
Square Foot Cost Comparisons
- Remember that after you receive an offer, the buyer’s lender will order an appraisal, so you will want to compare homes of similar square footage.
- Appraisers don’t like to deviate more 25% and prefer to stay within 10% of net square footage computations. If your home is 2000 sq. ft., comparable homes are those sized 1800 to 2200 sq. ft.
- Average square foot cost does not mean you can multiple your square footage by that number unless your home is average sized. The price per square foot rises as the size decreases and it decreases as the size increases, meaning larger homes have a smaller square foot cost and smaller homes have a larger square foot cost.
Market Dependent Pricing
- Same house, three different prices. After you have collected all your data, the next step is to analyze the data based on market conditions. For comparison purposes, let’s say the last three comparable sales in your neighborhood were $150,000. In a buyer’s market, your sales price might allow some wiggle room for negotiation but be strong enough (near the last comparable sale) to entice a buyer to tour your home. To sell in this market, you might need to price your home at $149,900, settling for $145,000.
- In a seller’s market, you might want to add 10% more to the last comparable sale. When there is little inventory and many buyers, you can ask more than the last comparable sale and likely get it. So that $150,000 home might sell at $165,000 or more.
- In a balanced or neutral market, you may want to initially set your price at the last comparable sale and then adjust for the market trend. For example, if the last sale closed three months ago, but the median price has edged upwards of 1% per month, pricing at $154,500 would make sense.