Real Estate Q&A for August 10, 2014
We are considering placing our home on the market and have obtained several so called “comparables” from 3 different reputable Realtors. The range in suggested selling prices vary from $175,000 to $229,000. Our first question is how can these proposals vary this much, and second, how do we choose which value is reflective of the true market value of our home? We are confused and not sure which direction to turn and whose price is correct. Thanks for your input.
— Anthony and Vivian, Grand Junction
Anthony and Vivian,
This is a great question, as I see this conundrum every day in my line of work. From my side of the fence this is a hard one to answer, because I always feel like I am fairly close when I provide a market analysis to a perspective customer, only to later find out that from time to time there is a large spread in the numbers presented from each Realtor. I know this dilemma exists, but still is hard to always pinpoint how the numbers presented have such a large difference.
The first thing I can suggest is check the comparable properties and make sure they share like characteristics. By this I mean are they all the same bedroom and bathroom count, same size garage, same age, location etc… If that all looks good, then check and make sure that all of them are the same style, as in ranch style, two story, 3+ story etc… I have seen market analysis’s where all of the homes used were ranch style and the home where the value was being determined was a two story home. If you have one agent not using “like” product to determine value, then it can sway the value quite significantly and thus create a large spread. Typically one should use ranch style homes for ranch style homes and two-stories or multi-level homes to compare multi level homes. You can also use the same analysis on the age. Many times I have seen agents using much newer homes to determine value on an older home and this also can create large swings in value, as newer homes typically bring higher prices than older homes. Basically you need to go through each market analysis and determine if there are any outlying factors that may be having an impact on the suggested price and look for the analysis that compares the most similar homes to yours.
There is also the aspect of how unique or a-typical is your home. If you have a unique setting or features then it opens things up quite a bit to interpretation and how each Realtor believes this will or wont impact the pricing and value, as seen by buyers. I am a firm believer that pricing a home is not just numbers and statistics, but much of it is an art.
A Realtor has to know what buyers are looking for and know how they perceive certain characteristics of a home to establish what the real value is. I know, from my previous life, that practicing medicine is an art. I used to not think so, but looking back, I know it to be true. A physician has to know not only which drug may treat your ailment, but also how each drug will interact or impact other drugs and thus may have to “tweak” several drugs, just to add another one. This, by no means, puts me on the same level with your physician, but is to illustrate that there is more to writing a prescription or putting a price on a home than what is indicated by the drug’s label or what the raw numbers say about a homes value. Each home feels differently, flows differently, lives differently and has its own unique setting or lack there of, just like each patient is an individual whose entire being needs to be considered before prescribing a medication. It is an art, a different kind of art, but still an art. And as it is with any profession, those who are the best artists are often those who have the strongest track record.
Lastly, I would say, go with your gut instinct. It is rare that I find a seller who is totally “out to lunch” on the value of their home. If the price sounds too good to be true, it probably is and if the price sounds way to low, it probably is. What is the price range of homes in your neighborhood and area? Another question to ask yourself: would you buy your own home at X price, if you were a buyer in the market for a new home? Often times, by removing the emotion and asking some simple questions, you can help determine which of the agents is the closest to having the right price. I know this does not completely cover the question, but should give you some good direction to make a wise choice. Hope it helps.
The Kimbrough Team
REMAX 4000 Inc.