Pricing your home based on comparable homes sold
After you’ve rated your home’s condition (Using Our Guide), the next step is to compare with sold homes that are similar to yours, then make positive and/or negative adjustments accordingly. These homes are what we in the industry like to call “comparables” or “comps”.What is a comparable home?
The FIRST thing real estate appraisers and realtors will look at are the comparables. These comps should be:- Close in Distance – In urban/suburban areas: stay within the same neighborhood or within a mile. In rural/semi-rural areas: you can go outside of a mile if there are limited comps, but try to stay within the same city/township or a similar city nearby.
- Sold within the last 6-12 months – try to find recent comps to get the most accurate market value. If you have to search past a year, make sure you adjust accordingly.
- Similar in Style – Compare yours to others with the same style; ranch, colonial, cape cod/bungalow, split/bi-level, modern or contemporary.
- Similar Condition & Age – Using our guide, what condition rating would you give your home? Compare to homes that are similar in condition and around the same age. Don’t compare a home built in 2001 to a home built in 1950. If comps are limited, you can use homes with a rating above or below yours. Just make sure you adjust accordingly.
- Close in Livable Square Footage – or “above grade” sq ft. Try to stay within 400 sq ft of your home. Do not count the following as livable square feet (appraisers do not): screened patios, unfinished areas or attics, garages, and basements (even if it’s a walkout).
- Same External Factors – What you physically see from your property will affect its value. Positive Influences (max-min): lakefronts, golf courses, public parks, woods, bluffs, creeks, community centers, and cul-de-sacs. Negative Influences: busy streets/high traffic, high tension wires, freeways, gas stations, commercial/industrial properties, waste plants, and railways.
Making Adjustments (Accordingly)
When comparing your home, think as objectively as possible. You need to look at it like you’re selling a house, NOT your home. Take renovations into account only if they add value Make positive or negative adjustments off the following (in order from large-small adjustments).- Condition & Age – If your home is similar to another in many ways but is rated one below or above, you can make a significant adjustment (5%-10%)
- External Factors – Not every comp will have the same external factors as yours, but it’s good to find at least one comp that shares a positive or negative factor.
- Time – If your comp is more than 6 months old, you will have to make a time adjustment since the market has increased!
- Livable Square Footage – the market you are in will dictate the value per sq ft. Adjust based on the difference of yours and the comp.
- Property Features (internal factors)- The following will add value to your home (in order from min-max): fireplaces, sheds, patios, decks, covered porches, access acreage, basement recreation rooms, outbuildings, and in-ground swimming pools.