What Goes Into Pricing a Home?
Whether you’ve owned a property for 25 years or 4 years, you’ve likely spent a lot of time, energy, and money to make your house a home. It’s natural to have some emotional investment in the sale. But it’s important to remember that a buyer doesn’t have the same connection to the property that you do. So, if we’re not determining a property’s worth based on emotions, how are we doing it? Comparative Market Analysis and extensive market knowledge go into coming up with a pricing strategy to fit your transaction.
A Comparative Market Analysis typically includes:
Examination of Comparable Sales: These are the sales most closely resembling your property. Comparing a tri-level to a single-story home doesn’t make a lot of sense for pricing. We’re looking to compare homes that are mostly identical in location, square footage, age of construction, available amenities, upgrades, and so on.
Location Consideration: Location is a big contributing factor when it comes to price. If you took two homes, of the exact same specifications, and put one on busy main road and one on a quiet side street—the prices could be drastically different. It doesn’t matter if they’re the exact same build.
Withdrawn or Canceled Listings: One of the more common reasons a home is removed from the market is because of issues with price. If the asking price was too high; offers weren’t coming in and the ones that were ended up being too low. Listings could be canceled because of factors like seller’s remorse, but we want to look at what sales didn’t work out—not just the successful ones.
Active Listings: These are homes currently for sale in your area—the competition. They’re not necessarily indicative of the market value because the price set might not be realistic for the area. The sales prices don’t officially reflect market value until they sell, but it’s important to know what you’re up against.
Sold Listings: Properties, similar to yours, that have closed within the past three months can be considered comparable sales. These are the sales that an appraiser typically uses to help value your home along with pending sales in the area. These play a significant role in defining the market value of the home.