Do You Know How Comps Impact Your Asking Price?
When you are working to establish an asking price for your house a good real estate agent will pull the comps in your area. Comparing your house to those that have sold around you can be a great way to establish an attractive selling price to move your house quickly off the market.
However, there are situations where comps can negatively impact the final price you are able to sell your house for, and their for your initial asking price. Understanding these situation can help you know how to combat them.
The Lowdown on Comps
When an agent pulls “comps” to show you what to establish your asking price at, he or she is showing you what comparable homes in your area have sold for. The report should include the original asking price, the selling price, the features of the house and how it compares to yours. For the most part, the market dictates what you are able to sell your house for. Your two bedroom ranch will most likely not sell for the same price as the 6 bedroom colonial down the street.
Comps work great in situations like planned neighborhoods where the houses have similar floor plans and lot sizes. However, they get a lot trickier in neighborhoods where the houses differ greatly or the atmosphere of the neighborhood drastically changes from block to block. The following situations are ways that comps can have a negative impact on your asking price:
Differing Neighborhoods
There are many areas in the country where the crime level and quality of the houses varies greatly from street to street. If the comps in your area include homes that are sold several blocks over on a run-down street, the numbers can drag your price down. You will want to make sure that your agent is familiar with the neighborhoods that the houses have sold in and how to adjust the comps pricing off of that information.
Nearby Factors
If a house that sold recently is next to an industrial park or garbage dump, the selling price is going to be much lower than what your asking price could be several blocks away. However, if your agent is familiar with this fact they could allow the pricing of the comps to cause you to price your house lower. Some agents include an “other” section on the report to indicate any of these factors that could be causing an extreme fluctuation of selling prices in one direction or another.
Size of the House is Not Considered
The number of bedrooms that a house has is important when comparing real estate selling prices; however it should not be the only consideration. The total square footage of the houses should be included in the comparison. The sizes of the bedrooms should come into play as well as the other usable square footage of livable space. If a house sells down the street from you with 3 tiny bedrooms it could bring down the price of your home that features 2 spacious bedrooms with en suites.
There are No Comps
If you are the first person to sell a house in your area you might be up against some challenges. If there are no comps in the area, chances are your house might sell for less than it could otherwise. The first houses to sell in an area begin to establish the trend that future houses are able to sell off of; without those comps available buyers might not be willing to pay as much.
How to Proceed
If you feel that the comps in your area are giving your house in unfair disadvantage speak to your real estate agent about it. While there are some ways to overcome some of these situations, it still does not mean that you can establish an unreasonably high price in the market. Your agent should be able to help you weigh all of the favors and set a good asking price from the start.