You can’t control everything, but you can control the comparable sales data
I mentioned in a recent blog post how buyers and realtors have been conditioned now after about a year and a half to expect everything to sell for well over list price. Expectations change. It is the new reality. We adapt to the new reality
And seller expectations change too. They see a house in their neighbourhood selling for $100,000 more than a year ago and they think, “I could sell for that too”.
I recently was successful with an offer, not because it was a great offer but because ten other realtors and their clients stayed home instead of offering. Their expectations as well as those of the seller and her agent were not correct.
What happened was that the house two doors down from the new listing sold for $560k a month or so earlier. The homebuyers and their agents as well as the seller and perhaps her agent all thought that the target home, the new listing would sell for near the same. Even when we were touring the house, my clients asked me what I thought it would sell for and off the cuff I said what everyone was thinking,
“Well,” I said, “the house next door sold for $560k so I expect it will be near that”.
But it turns out if you had been paying attention (and maintaining a spreadsheet) that that house, the one that sold for $560k was a outlier. The buyer of that house wanted it at any cost apparently. Maybe he had lost out on other bids too many times. Maybe his sister lives next door. Maybe it was a good price for a four-bedroom house of near 1500 square feet. Maybe the February Frenzy made him frantic, frightened and frivolous.
I don’t know.
The point I am trying to make is although it is exhausting, we cannot base our expected selling price on the house next door. We have to do due diligence and look at a whole bunch of other things including most recent comparable sales of similar homes in similar neighbourhoods.
When I’m talking about comparable sales, I want good comparables with the same number of bedrooms, a similar square footage, assessed value, age and neighbourhood.
Because it turns out sometimes the house next door is a bad comparable.