A few weeks ago I wrote about Price Per Square Foot as a way to price homes. Having spent 14 years in Corporate Real Estate before I turned Residential in 2003, I ALWAYS start with price per square foot – then adjust accordingly looking at features, location and lot value.
But with this CRAZY market where pricing it right makes ALL THE DIFFERENCE IN THE WORLD (see last week’s Price it Right or Expect to Hear Crickets) let’s pause. Take for example two homes that are currently on the market in the RoundHill area of Alamo next door to each other! Price per Square Foot would have these two homes priced about the same – one is a little bigger, with an extra bath, but same street, same Golf Course View – but not the same condition. One came out at just over $1.7MM, the other came out at just under $1.6MM. Now as a percentage of asking price – we’re talking less than 10% – but in reality… $1.6MM got Multiple offers and went way over. $1.7 has been on the market for 54 days and has had a price reduction.
Why, why, why? You ask… Because how you price a home, especially if it’s NOT a tract home, is so critical in this market – if you don’t get it right – it can make your life miserable. And it’s my job to keep you from having a Miserable Life when it comes to Real Estate!
So… The Comparable Sales Approach is the most common, and in this market the best way to price a property. While it may not be the most mathematically accurate approach, it is the approach most likely to get your home sold (or to make you the successful buyer if you are in a multiple offer situation (BTW – Always use a Professional if you find yourself in Multiple Offers – you will surely get blanked or over pay if you try to do multiple offers on your own or with an Out Of Area Agent!).
The Comparable Sales Approach has three basic steps:
- Look at Recent sales that are “comparable” – same area, similar size, similar lot, condition and upgrades to your home
- Adjust the Value to these same factors – location, size, lot size, condition, upgrades. For example (see above) a remodeled home will command a significantly higher price even if the other home is slightly larger.
- Adjust to the current housing market – as this changes with the wind, it’s important to work with someone who has their ear to the ground locally, not their ear to the media – which is always 3-6 months behind what is really happening.
I will arrive at a home’s current value using this approach, along with a first look at Price Per Square foot. However, the very best way to determine the value of YOUR home is to call an expert – like me J – to give a Free Home Value Analysis. Give me a ring at 925-855-1955 today!
Disclaimer: This information is provided for reference only and is deemed reliable, but not verified or guaranteed. Listings may or may not be by Nancy Benvenuto or The RE/Max Collection. If your property is currently listed with a real estate professional, it is not our intent to solicit those listings.