Before you put your home up for sale, understand how the right comparable sales help you and your agent find the perfect price.
How much can you sell your home for? Probably about as much as the neighbors got, as long as the neighbors sold their house in recent memory, and their home was just like your home.
Knowing how much homes similar to yours, called comparable sales (or in real estate lingo, comps), sold for gives you the best idea of the current estimated value of your home. The trick is finding sales that closely match yours.
» 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.
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 homeowners 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.
Sales sweeteners: Did the comparable-sale sellers give the buyers downpayment assistance, closing costs, or a free television? You have to reduce the value of any comparable sale to account for any deal sweeteners.
» 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 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 her without taking the criticism personally).
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?
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.
These are basic rules to follow. Please consult a local a Realtor and work with them to get the most amount of money for your home sale and to also make the process smooth and hassle-free.
Bob Walsmsith Jr. is the 2022 president of the Santa Barbara Association of Realtors (SBAOR). He is a California licensed real estate agent with Berkshire Hathaway HomeServices California Properties here in Santa Barbara. He has served on and chaired several committees within the SBAOR, and served on its board of directors for the past five years. Bob can be reached at 805.720.5362 and email@example.com.