How to price when comps don't tell the whole story

KomehtFebruary 12, 2013

OK - not to be immodest - but my DW and I have impeccable taste, not only in home selection, but in finish out and the furniture (If I were to describe our style it would be current and forward without being trendy - somewhat timeless without being traditional at all, if that makes sense). We don't have kids, and we spend our money fixing up our pride and joys. We have typically had smaller SF detached older very well cared for bungalows in central neighborhoods very close to downtown that have fared well compared to general market.

Here's the issue - each time we've sold, we have looked for the very top realtor's in our area, interviewed at least 3 before selecting and examined all comps. In each case we felt the comps were never quite right. In each case we priced aggressively ahead of the comps. And In each case we still received multiple offers in first week and sold for over asking. Our last two homes sold after being on the market for only a day or two.

So, if we do this again. . .how do we really price things? Once again we are in a somewhat unique (and I think highly desirable) home for the area and I fear again that if and when we go to sell the comps won't accurately capture the true market value. So without comparable comps - what's the best way to price?

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ncrealestateguy

When I comp out a property, I manually add a field that I call "Other Features" and another field named "Overall Quality" I use these two fields to capture the intangibles that vary from house to house.

    Bookmark   February 12, 2013 at 6:48AM
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cmarlin20

I think NC said it well. If you are honest and know your house looks good, and I mean to buyers, price it aggressively.
In my area houses like that sell for high numbers and fast, we have a small inventory, good stuff goes fast and over list.

    Bookmark   February 12, 2013 at 8:53AM
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weedyacres

Usually when I hear "aggressive pricing" it implies lower than comps (i.e., wanting aggressively to sell). In this case, it sounds like all of you mean aggressive = higher than comps. Am I reading this right?

    Bookmark   February 12, 2013 at 9:18AM
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brickeyee

"but in finish out and the furniture "

Furniture does not normally convey.

Are you selling furnished?

Your taste may not be the buyers taste, not matter what your personal opinion of your "impeccable taste."

Buyers are trying to figure out what it is going to look like with THEIR furniture and decor.

They could really care less about yours.
.

    Bookmark   February 12, 2013 at 9:46AM
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Komeht

Sorry, yes I meant higher than comps would otherwise indicate.

Brick eye: surely taste comes into play in remodeling projects and fixtures/appliances and landscaping etc. that do convey.

Surely staging makes a difference - since people pay money to stage homes.

Surely you didn't really think we sold our furniture.

    Bookmark   February 12, 2013 at 10:54AM
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kirkhall

In what year did you last sell?

I ask because, if you have an appraisal clause in your contracts (your buyer puts in an appraisal clause), be prepared to have to settle for much lower than your buyer was willing to buy at because it won't meet "appraisal" for financing. Or, be prepared to only accept cash offers. Or, be prepared to run through a number of offers/financing contingencies/re-listings because of financing issues.

The appraisal rules have changed a lot. If they can't find anything like your house in your area, they will appraise it for not a very high percentage over the best comps they can find. The premium on the appraisal will not be the same premium a buyer is willing to pay. But, once the buyer has that appraisal (and the bank has that appraisal), they won't likely pay any more (or anything more, will need to be cash out of their pocket, you will need a well-qualified buyer).

    Bookmark   February 12, 2013 at 12:09PM
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cmarlin20

Surely taste comes into play in remodeling projects and fixtures/appliances and landscaping etc. that do convey.

Surely staging makes a difference - since people pay money to stage homes.

Surely you didn't really think we sold our furniture.

I agree, nicely remodeled and staged houses sell faster and for more money.

Buyers DO care about the current furnishings, they know they are not buying it, but seeing a nicely furnished house, creates a good feeling for the buyer.
I know many here think they are smarter than the seller, but for most of the buying public, nice furniture does sell a house. You can say do don't care, but the seller is not selling to you.

    Bookmark   February 12, 2013 at 2:01PM
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LuAnn_in_PA

"Surely taste comes into play in remodeling projects and fixtures/appliances and landscaping etc. that do convey. "

Not if your taste is vastly different from mine....

    Bookmark   February 12, 2013 at 3:45PM
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adellabedella_usa

I think for something like the OP's plan to work, you would have to be selling in an area with a housing shortage where it was hard to find nicer houses. Even then, you would be limited by the appraisal. I still think you would quite possibly end up putting more into the house than you could recoup when selling.

    Bookmark   February 12, 2013 at 4:04PM
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weedyacres

Is there a reason you don't think your previous strategy will work this time around?

    Bookmark   February 12, 2013 at 4:51PM
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Komeht

Weedyacres: selling a home isn't a problem, I'm looking to maximize value.

Adell: this is in an especially hot market...I know those come and go, but this area of the country remained neutral during the crisis and took off like a rocket since then. In any case the remodeling we've done has been for ourselves, just so happened that we needed to move for career reasons.

Kirkhall: last sold in 2012/bought in 2012...I haven't yet found a problem with appraisals on either side...we were also warned by a realtor who wanted to price our house 50K under that it would never appraise for what we wanted to sell...that realtor was wrong. We have sold/bought 4 homes..,its funny how the appraisal always comes out right at sale price..it looks to me as if appraisers are still playing with the banks around here.

In anycase, the offers I've seen come in have been pretty strong with well qualified buyers bring a lot of equity, so even a bad appraisal wouldn't necessarily be a deal killer

Luann...what you're saying is you agree with me that taste makes a difference (if yours differs from mine then your less likely to purchase home, no?). In anycase, people love our homes and the feedback we get both in sales and otherwise is pretty positive - better than the comps, which is my point.

    Bookmark   February 13, 2013 at 12:11AM
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runninginplace

I'm not really understanding your question, at least in terms of trying to solve a problem that you don't seem to have. If you have priced your previous houses higher than the market average and/or your realtors' advice but they have all sold, and you feel you have an excellent product...then what is the issue? Seems you should just put the price you think you can get out there, then see what happens.

What am I missing here? This is an honest query, BTW. Not a veiled criticism, so hope it doesn't read that way.

    Bookmark   February 13, 2013 at 5:52PM
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Komeht

The question is how to maximize value the next time this comes up. In my experience so far, realtor's (all vetted and interviewed) have all unpriced our homes. Comps have been very misleading in the passed about the true market value. If this comes up again, I would like to be prepared - in situations where comps aren't accounting for intangibles that sell a home (as has been my experience) - what is the best way to price a home to maximize price.

    Bookmark   February 13, 2013 at 10:46PM
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function_first

It sounds like you're saying that this experience proves you priced too low: "And In each case we still received multiple offers in first week and sold for over asking. Our last two homes sold after being on the market for only a day or two."

But to me this experience shows that your careful selection of realtors resulted in a perfectly priced house, with ideal results. And your tasteful decor and improvements likely helped create the feeding frenzy that resulted in a quick sale. Kinda like the perfect storm where house selling is concerned.

    Bookmark   February 14, 2013 at 7:10AM
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brickeyee

" last sold in 2012/bought in 2012"

You are going to be paying federal taxes on any gains you get.
It would appear you have not met the 2 of the previous 5 years test since you are only around one year of ownership for the $250,000 per person. $500,000 per couple tax break.

If your tastes do not match the buyers they are of little value.

I have seen buyers walk away from places with extensive decorative gardens.
Only someone with a lot of time on their hands, or a lot of spare money to hire a gardener, could maintain them.

    Bookmark   February 14, 2013 at 10:54AM
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Komeht

brickeyee - I'm not selling right now. I'm interested in knowing how to play it next time I do sell.

    Bookmark   February 15, 2013 at 9:30AM
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Jean Bo

Komeht, I found this posting very interesting because we will be in the same boat you are looking at right now. My Mom is in a house that was designed and built by my father who was a forward thinking, he built his dream house. Altho the property is from the 70's it has features that most newer homes don't have, it is contemporary in design. She is always getting the comments, "if you ever want to sell....." There is a two story garage with an finished loft office, and the garage includes a 1/2 bath. Anyway the house in good times should list in the millions. But when they do comps in the area (spec homes) people are saying well all homes in the area are under 300k........ so it really is a knife to the gutt. You listed some really good points and I would love to hear how your progress goes.

    Bookmark   February 15, 2013 at 3:17PM
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brickeyee

" I'm not selling right now. I'm interested in knowing how to play it next time I do sell."

The market is likely to have changed enough in the intervening years to make detailed plans useless.

    Bookmark   February 15, 2013 at 8:44PM
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GreenDesigns

I'm sure the comps don't tell the whole story on this either.

Here is a link that might be useful: Tastes Differ

    Bookmark   February 16, 2013 at 8:00AM
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c9pilot

@greendesigns - Good point. Even if I were a bazillionaire, I would NEVER live in a place like this. Yuck.

    Bookmark   February 17, 2013 at 4:20PM
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