How do real estate agents determine how much my house will sell for??
The Art of The Comparables
It’s the million-dollar question: What is my home worth? To figure that out, one of the main tools you and your realtor will use is nearby comparable sales that have occurred in the past year. But since no other home is exactly like yours, how do you find an apples-to-apples comparison?
Ask yourself this question: If my home wasn’t for sale, what other properties would my would-be buyer be considering? The answer to this question can help guide you to good comparable sales (A.K.A., “comps”). And finding accurate comps is critical since the home appraiser for your buyer’s mortgage lender will do the same thing. If your home doesn’t appraise for the agreed upon sale price, it’s likely your buyer will either hit the bricks or try to negotiate a lower sale price.
Ideally, you want to find homes in your specific neighborhood that recently sold—within the last 3 to 6 months—but if there aren’t any, start looking at a radius of one mile of your home, and go outward from there if necessary. Most professionals will not use a comp that sold more than a year ago since markets can substantially fluctuate during that time.
Try to avoid crossing major streets or into different school districts, since this can have a big impact on values. Also, be sure you’re looking at houses of a similar age to yours; older and newer homes may have dramatically different price points.
Finally, you want to find homes that are of a similar size and condition, with similar finishes and upgrades as yours in order to figure out an accurate price per square foot for your local real estate market.
Never fear: If you’re feeling overwhelmed at the prospect of researching comps, thankfully, an experienced realtor will be able to do much of this legwork for you! Other than location and date of sale, what do you think is the most important criteria to pick a good comparable property?
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