Listing Triangle™ - Front Street Brokers | Page 25

sell for. It’s an easy calculation to make, but this simple calculation has burned
more homeowners than we can count. Too often we see homes that are well
underpriced or overpriced using this method. Overpriced homes sit on the
market too long, and homeowners are eventually forced to drop their price
below where it should have been listed in the first place, and end up getting a
much lower price for their home. Or homeowners just cancel their listing,
assuming the timing is not right to sell when in fact the pricing is just thrown
off by using price per foot valuations.
So let us be as blunt as we can be: just don’t do it. Price per foot doesn’t
account for:
•
The quality or condition of the house
•
The appeal of the floor plan
•
The bedroom count
•
Ceiling height
•
Amount of windows (natural light)
•
Which way the home is facing
•
Whether it is located on a busy street or quiet cul-de-sac
•
Whether it needs a lot of maintenance or is in pristine condition
•
Garage size
•
Lot size and lot improvements
•
Curb appeal and what the neighbors’ homes look like
The temptation to use price per foot must be avoided. Appraisers don’t
use this calculation for all the reasons listed above and neither should agents
and homeowners.
Comps
When trying to determine pricing for houses, agents will look at sold
comps, pending comps, and active comps. However, the skill lies in how one
weighs and evaluates the comps.
When we look at sold comps, we want to do a couple of things. First,
we want to mirror what an appraiser is going to do. They’re going to be under
very strict guidelines of how and what they look for. They often can only be
within a 20 percent difference in square footage from comp to comp. Usually
they’re required to use a comp that sold within the past six months. Ideally
they want to compare within a mile radius, but they’ll sometimes make
exceptions. They also try to match the levels a home has—if a house has a
basement, for example, they will only look for comps where part of the home
has below-grade square footage. They can’t compare a two-story house to a
single level with basement. We want to try to mimic what appraisers are going
to do so we have an idea of the comps they’re going to use. This helps us know
The Listing Triangle™
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