Setting a price for your home is a big decision and the #1 Question is: How quickly do you want to sell?
Why is that such an important question? Because if you price it according to fair market price…in other words, you price it comparable to similar, recent homes sales, you should sell in a reasonable time. However, if you set a price that is higher than comparable sales, you risk your home sitting on the market too long. Too many days on market creates the thought in a Buyer’s mind that something is amiss with your home and if offers come in, they are usually lower than fair market price would have been! Ouch!
So, let’s talk about this Almighty Real Estate Comp! A Comp is a ‘Comparable Sale’ of a home that is very similar to your home. It considers several factors; foremost are:
- Square Footage: A good Comp will be within 25% of your square footage (either more or less).
- Location: If possible, stay in the same subdivision and school district, or preferably within a mile radius.
- Age: New construction is not a comparable for a resale home (adjustments would be required). However, housing ‘eras’ can roughly be grouped, such as a home built in 2000 can be considered a comparable with a home built in 2015 (taking upgrades and improvements into account).
- Date of Sale: Comps need to have sold within 90 days, preferably.
- Home Style: Comparing numbers of bedrooms, bathrooms, other rooms, garage spaces, etc.
- Upgrades/Improvements: Comparing age of interior finishes, appliances, roofing, HVAC, etc.
Want a list of common COMP price adjustments? CLICK HERE
These Comp Values are used to produce a CMA (Comparative Market Analysis). CMA’s compare your home, and all of it’s attributes, against those recent, similar sales we mentioned. Price adjustments (both plus and minus) are calculated and the result is an estimate of the probable selling price range for your home. All strictly based on raw market data.
Mining this information is a critical piece to placing a price on your home that Mr/Ms Buyer are willing to pay for…because Mr/Ms Buyer are probably armed with the same data! And it’s likely they won’t be jumping at the chance to pay more for your home than the market data says it’s worth!
Beyond this data-produced CMA price range, these days a savvy Seller must also consider the Internet and the search methods most Buyers use! If the price range produced by the CMA is $500,000 – $515,000 (for example), it might be wise to consider a price of $499,000 in order to pull it into the typical search ranges used on real estate websites. Pricing your home at $505,000 would cause you to miss all those shoppers inputting the high search limit at $500,000…and the higher you go in price, the fewer buyers there are!
A new home always starts with taking that first step! My goal is to make the pathway to your new home as free of surprises as possible. Surprises are for birthdays and holidays…not home buying! I want to help you take that first step to finding your “No Surprises Home”