Home Selling in 94598>Question Details

Dayna Wilson, Real Estate Pro in Walnut Creek, CA

When Pricing a home with few or no comps within the near vacinity, what do YOU do? Go back further than 90 days, extend your radius?

Asked by Dayna Wilson, Walnut Creek, CA Sun May 6, 2012

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7
Craig Bosse’s answer
That depends? Where is the home? In a rural or city setting? Why are there few or no comps in the area? Are there very few comparables because this home is much larger/smaller ?

There is no simple catch all on what you should do. It would depend more on the home. Can you give us more details?
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0 votes Thank Flag Link Thu May 10, 2012
What I've done is to tak local comps from the same area, even though the property sizes may be different. I then average the price per sq ft of all sales in the area for the last 6 months.

It's tricky...but sometimes that's the best you can do!
0 votes Thank Flag Link Mon May 7, 2012
Thanks, Cindy. What have you decided regaring moving up the the Bay Area? Can I be of any more assistance? Would love to work with a fellow professional if you have not chosen someone yet. Feel free to contact me so we can 'interview' one another.
Flag Mon May 7, 2012
Sometimes the best comps are not within a close radius to the subject or sold within the last 90 days. If you have a lot of sales in the same subdivision or close radius and they are in similar condition and gross living area (GLA), etc. it is not too difficult to perform a good CMA (comparative market analysis) or BPO (broker price opinion), but if there are very few similar comps available, more skill is needed. If major adjustments are necessary for all the close comps, you need to go outside the immediate area. The current appraisal guidelines are not helping, when you have a property with very few similar comps! I tell my sellers, we have to sell it twice, once to the buyer and then to the appraiser. This is a challenge when you have what I call an emotional home. Example: over-improved, spectacular view, architectural quality, fabulous backyard and oozing with appeal. Buyers may bid this up to a sales price way over the “comps”, then the appraiser a cometh and does not find the value! I would select comps a little outside of the recommended “tolerances” for the Fannie Mae, Quality Control guidelines in radius and date of sale, but that would appeal to the same buyer prospects with amenities like same school border, infrastructure, etc. I would also make sure the other area historically sells for the same price. I would also go back 180 days and adjust for market conditions, if necessary. I would then explain why these comps were selected in my narrative remarks on my price opinion. I would hold on to my report and meet the appraiser at the home. No lock box access for appraisers in this situation!! I have contested several appraisal values for friends and clients trying to refi in this situation too and have had a lot of success. Of course, it can be the opposite value situation with short sales in poor condition and we have to justify a sales price under the “comps” when the short sale lender orders an appraisal from an out-of-area firm and we get an insane high appraisal....
0 votes Thank Flag Link Sun May 6, 2012
It's insane to extend your radius. I hear about brokers doing this on BPO's all the time and I just don't get it. We were all taught in Real Estate Kindergarten that location is the primary factor in determining a property's value. Replacement cost for the structure is relatively simple to estimate, and in premium markets the structure usually contributes least to the total value of the property. Structures can be replaceed - locations can't. We see throughout the Bay Area that a record number of "full price" purchases quickly become tear downs, especially in Silicon Valley.
My point is this - focus on the value of the neighborhood, not the structure. It's easy to calculate the delta of value between properties with "X" versus "Y" bedrooms and baths. If you can establish the value of the land, it's a downhill ride to calculate the replacement cost of the structure and arrive at a total.
0 votes Thank Flag Link Sun May 6, 2012
It depends on the area. We had a listing last year for a 3BR condo in San Francisco in a neighborhood that no 3BR's had even been listed in over a year, so we had to be creative. We looked at 2BR's in the same neighborhood, and 2 & 3 BR's in surrounding neighborhoods. We discovered that while prices varied we came up with a nearly identical multiplier for price per sq ft between 2 and 3BR units across all neighborhoods.

This may not not work in your area, and you may want to use different methods depending on type of property. For example if you have a 5 or 6 bedroom property you probably aren't going to find a lot of comps so you might look at 4BR+ and extrapolate. Your broker should be able to help you with this.

Best Regards,

Lance King/Owner-Managing Broker
lance@fixedrateproperties.com
415.722.5549
DRE# 01384425
0 votes Thank Flag Link Sun May 6, 2012
I would go back up o 6 months in today's fairly static market, before I would extend the radius. Then if it was an older home, look at even older ones or up to 115% of living space before I would expand the radius too much. LOcation is the biggest deciding factor, so I tend to lok more at subdivision lines, school district lines etc. rather than a radius.

Bernard Gibbons

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Bernard Gibbons, J. Rockcliff Realtors
DRE License # 01331583
Phone (925) 997-1585 - bernard@bernardgibbons.com


http://www.BernardGibbons.com
0 votes Thank Flag Link Sun May 6, 2012
Good advice, Bernard. Thanks!
Flag Mon May 7, 2012
I try to emulate the way an appraiser would evaluate comps. They try to find 3 solds with 3 miles within 3 months, then go further out and then change the stats on the property of interest.
It's hard with values changing for the better. I also prepare my sellers that the comps may be 3 months behind on seeing a boost in values.

Suzanne Looker
0 votes Thank Flag Link Sun May 6, 2012
Thanks! I was recently shocked that the sellers lender (short sale) appraised a Clayton home $25K higher than the buyer's lender. Argh! And, prices are going up, not the other way around.
Flag Mon May 7, 2012
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