Setting your Price. What are comparables?

By
Education & Training with House Proud Ottawa-Ontario-Canada

How do REALTORS® and people selling privately determine the price of a property?  The key element is to research the market and find comparable properties.  Making comparisons is a blend of good research and market knowledge.  Some basic guidelines to finding comparable homes (both sold and currently for sale) are:

  • The closer in physical proximity to your home, the more comparable.  Houses in Vancouver are unlikely to make good comparisons to similar homes in Ottawa.  Some out of town Buyers are amazed at the market differences.  There really aren't comparisons that can be legitimately made across the country or across the city.  Remember the adage:  Location, location, location.
  • The closer in date to today for a sale or another listing, the more realistic the market indicator. 
  • The ability to be honest with yourself about what makes a comparison.
  • The knowledge of sold prices.  While you may know what your neighbour asked for his/her home, you may not know what the final sold price paid was and if there were any concessions such as decorating bonus, closing costs, redone roof prior to possession, etc..  The sold price, more than the asking price, is the real indicator of realistic expectations. 
  • The ability to adjust prices between similar properties that have differences.  For example, adjusting the price for the difference of a two car garage in one home and only a parking pad on the other, the former will have more value.  (If the garage is functional :-)If one has an updated kitchen and the other is all original from 1970, then the former will have more value.  While location is key and timeliness is vital, features cannot be ignored.

Be honest with yourself about your ability to get good comparisons.  You may find the "Free Market Evaluation" that most REALTORS® provide is a start.  Talk to people in the business.  If you think a salesperson is going too low, you might want to get the opinion of two or more REALTORS®.  Be wary of an estimate that seems too high - even though you would celebrate selling your home for that price.  You might not have the time to have your house on the market for 6 months or longer waiting for some naive person to pay the price.  I recommend having an agent help you determine the asking price for your home and to list and sell the home, thus keeping you current on changes in the market during the sale and giving you peace of mind that you are appropriately competitive and able to have your home sold.

On a regular basis, I post informationabout current selling prices in Ottawa neighbourhoods and also the sales history.  Look under the "Comparable Properties Sales Statistics' category if you are interested in more information.

 Photo credit:  old garage @ http://www.flickr.com/photos/lafattina/3870226487/

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Re-Bloggged 6 times:

Re-Blogged By Re-Blogged At
  1. Cheryl Ritchie 01/27/2011 07:25 PM
  2. Pam Dent 01/28/2011 09:56 AM
  3. Tony Marriott 01/28/2011 10:53 AM
  4. John Alesi 01/28/2011 02:01 PM
  5. Gene Riemenschneider 01/29/2011 08:50 PM
  6. Gabe Sanders 01/31/2011 11:26 AM
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Topic:
Home Selling
Location:
Ontario Ottawa Carleton Ottawa Civic Hospital Area
Groups:
BananaTude
Most Active ActiveRain Blogging Agents
Ontario Real Estate and Information
Realtors®
"Whacked"!!!
Tags:
zingers
selling
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Rainmaker
574,640
Valerie Zinger
Home Organizer
House Proud Ottawa-Ontario-Canada

Lyn:  Some agents are all about list - list - list.  But if the house doesn't sell and word of mouth is a primary way to get listings then the non-realistic price is way to kill future business.  Thanks Lyn.

Gene:  Well, thank you for that compliment.  Appreciated.

January 30, 2011 06:32 AM
Rainmaker
555,048
Chris Smith
South Simcoe, Caledon, King, Orangeville Real Esta
Re/Max Chay Realty Inc., Brokerage

Valerie, another great post.  I think this a the major reasons why data driven programs on the internet will never be able to truly give a good CMA.

January 30, 2011 08:40 PM
Rainmaker
574,640
Valerie Zinger
Home Organizer
House Proud Ottawa-Ontario-Canada

Chris:  So true.  Unless you can refine your search, the general data is just way to loose. 

January 31, 2011 07:04 AM
Rainer
157,250
Rhonda Abbott
Wadsworth & Greater Akron, OH
Howard Hanna

Fantastic post - very helpful for a newer agent like myself.  I do try to do exactly what you've said, but I find that the sellers just want to disregard that information and price according to what they owe instead of what they can really sell for.  They don't get it when I tell them that pricing even $10k above what the comps suggest as a fair price will hinder their efforts to sell as much as it does.  It won't sell if the owner's "best offer" (their asking price) is higher than any potential buyer's may be.

January 31, 2011 10:26 AM
Rainmaker
574,640
Valerie Zinger
Home Organizer
House Proud Ottawa-Ontario-Canada

Rhonda:  Thank you and keep on doing the right thing.  Listing a house that never sells is not good for you or the Seller. 

January 31, 2011 07:53 PM
Anonymous
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Rainmaker
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Valerie Zinger

Home Organizer
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