Is That a Comparable? Or Your Competition?

By
Real Estate Agent with Solutions Real Estate CA BRE Lic #01490977

Is That a Comparable?

Or Your Competition? 

How does the cost of your home compare to the competition?It's a fact - some homes are comparables, and some are competition. They are not necessarily the same. 

And depending on whether you are a buyer or a seller, and perhaps an agent, you will likely view these differently. And might not even consider them. 

Pricing is commonly based on comparables that have sold recently, generally within a fairly narrow geographic area, in the same complex or in that very building, depending on the market and availability of sold inventory. 

And as agents we focus on helping sellers figure out a listing price based on the comparables, which are typically in a fairly limited area. 

Is your home priced against the comparables or the competition?Sellers think their competition is the comparables.

A handful of properties that may or may not compare favorably, in their mind, to their own home. Which, of course, is "special."

It's a view they have that just might be exacerbated by our own CMA's that focus on comps, NOT the competition. 

Hah. Buyers, in many cases, are not looking just at comparables.

Unless they want to be in a particular building, or a certain complex. Their range of searching is far more likely to be possibly dozens of homes, or more - different styles, size, price ranges and views. Homes that are not just comparable to the seller's home but within some defined price range they are comfortable with. And likely not just in the seller's neighborhood. 

What if you picked a range of, say, $50K in the area of your listing? That's more likely to be the competition for your seller's, unless the buyers are persnickety and have a "must have" list of criteria that would choke an ox. And which places their wish into the realm of "I'm sorry but that does not exist for the price you want to pay." 

Mr. and Mrs. Seller - buyers are NOT just looking at homes comparable to yours.

They are looking at your competition. It's just the reality.

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Topic:
Home Selling
Tags:
sellers
first time sellers

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Rainer
8,828
Stephanie Hosala
Century 21 Indian River Realty, II, Inc.

Great post....and such a time appropriate reminder.

February 28, 2011 03:28 PM
Rainer
193,416
Eugene Adan
Carlsbad Real Estate
Adan Properties, Carlsbad, CA (760) 720-9710

Jeff,

I had this very discussion with a future client last week.  I wish you had posted this a week earlier because you stated it here very succinctly.

March 01, 2011 11:24 AM
Rainmaker
328,099
Debra Gould
The Staging Diva
Staging Diva / Six Elements Inc.

Jeff I totally agree with you on this distinction. As a buyer, when I'm looking for a home I do have a price range that I look at and every home is competing with every other within the category of what I'm looking for.

While I may be willing to pay $400,000 for one house, it doesn't mean I won't be willing to pay $50,000 more for another one around the corner. I compare both options and decide which is more worth it to me for the given price. SO the two options compete with each other for my buying dollars, even though they may not be true "comparables" when viewed the other way.

Now while we're on the subject of the competition and have lots of agents here... I emplore all of you to take your home sellers out to actually walk thru the homes that they're competing with. I'm shocked at how few of my home staging clients have ever personally seen how they stack up versus their competition. Their agents haven't recommended it and for some reason they haven't thought of asking. As we all know, what's written on the MLS only tells part of the story, you actually need to know how the home shows to judge how buyers will react— and who will "win" the competition!

March 01, 2011 09:29 PM
Rainer
13,671
Dawnita Griffith
Jay Fear Real Estate

I agree,  I have used this scenario with sellers for years, it works.  Sellers need to know if buyers are looking at their house, what else are they looking out and how do they measure up.  I appreciate how you explained it so other agents understand.

March 03, 2011 04:01 PM
Rainer
22,849
Pete Buckley
Independent Broker/Realtor, North San Diego County CA.

Hit the nail on the head Jeff! Many variable to present to Sellers if you're interested in doing it right. I also follow through with updates when competition turns itself into a comparable. That can work wonders too!

March 05, 2011 11:50 AM
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Ambassador
1,757,669

Jeff Dowler CRS

Carlsbad CA Homes for Sale (760) 840-1360
What's my Carlsbad CA Area Home Worth??
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