I thought I should follow up the last post about pricing only to the market with some information about establishing a price in a market where all the homes are different.
There are very few homes in the Barrington area that are the same as others. What I mean by that is we don’t have cookie cutter style housing where you have models repeated in the subdivision, making it easy to find a property like yours. So establishing a price can be a little challenging.
The 2 homes shown are identical from the outside. The house at the top has more interior upgrades and backs to conservation. The house at the bottom has been painted but backs up to a busy road. Which would you buy and would you pay more for the first or want a deal on the second?
There is very little chance of finding the same model home in the same location, with same condition and upgrades and some of the differences can make a substantial difference to price.
So how do Realtors price a home in Barrington. Actually it isn’t that difficult. The general rules are to find sales within the last 6 months, have the same bedroom count and near the same bathroom count and about the same size. They must be within a mile radius if at all possible. And school district can make a huge difference here in 60010 and 60047. That is a very basic overview.
I spent 4 years doing appraisals for banks who were foreclosing on properties or agreeing to short sales, and they always wanted up to date sales estimates, so I became pretty good at my numbers. Some of the additional rules I had to abide by were that age had to be no more than 10 years apart, square footage on main levels had to be within 20%, basement types had to be the same type and state of finish, exterior should be the same construction, updates should be of the same age, and general condition had to fall in the same category, of which I had 5 choices.
“I had to get all of that information just be standing in front of the property and snapping a few photos!”
Suffice to say in the Barrington and Inverness areas, where our homes are diverse in size, style and nature, a mile radius is often not enough of an area to find comparable sales. There is always something that doesn’t match. If I applied all the parameters above I could hunt or wait forever. When doing those appraisals, I had 48 hours.
As Realtors our job is not to appraise your property, we are not licensed to do that, nor are we being employed as appraisers. So what to do? Well if there are no true comparables, then all is not lost. It’s not difficult to find 3 or 4 properties that have enough similarities to establish a price range.
In a buyers market, with values declining, how do you pick the price from the range I gave you? Let’s say the range of comparable sales was $850,000 to $925,000. Knowing that your home is not the same as any of them, the tendency is always to think it is better. Naturally most sellers will pick $925,000 as a target and perhaps list in the high $900′s. There isn’t anything wrong with that price, nor would there be if you chose $850,000. Just know that if you choose the highest, you may be forced to adjust the price down, because in 3 months time that top price will have fallen perhaps to $880,000.
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