Today, Karen Fiddler, broker-owner of a real estate firm in southern California wrote a great blog post, "When Do You Want To Move? The Science Behind the List Price." In the post she clearly explains how to figure out months of inventory, and how that can best be used to recommend a reasonable list price.
In my area of California, the Peninsula from San Francisco to the Silicon Valley, we have an extreme shortage of inventory, with multiple offers the norm. When a property is unique in some way, finding proper comps to use isn't always possible, so as a listing agent I need to delve further.
A recent listing of mine is a good example. This property, in Belmont, California is a 2-bedroom house per the County Assessor's office. However, it is over 2500 sq.ft. in size, far larger than any 2-bedroom house I could find as a comp--larger in fact than most 3-bedroom homes in our area, and larger than many 4-bedroom homes.
What to do?
Here's what helped me recommend a listing price range:
- I found that the last sales of similar 2-bedroom homes in this PUD occurred 2 years ago
- I then researched what the average appreciation has been in that particular part of Belmont--not the town as a whole, and not San Mateo County; really dig down to specific areas.
- Applying that appreciation -- roughly 25% -- to the sales prices of two homes that sold 2 years ago, gave me a likely sales price.
- Knowing the trend in the market today--whether houses are selling at, below or above market enabled me to give my seller advice on a suitable listing range. The seller then chose the list price which fell within that range.
This particular property is currently under contract -- at a price just over what my formula suggested.
Take the time to properly research your market, and then reap the rewards.