What does the comparable sales data say about the market?

In real estate, comparable sales data is the holy grail of broker information about the value of homes and land. The near terms record of escrows closed on homes similar to your home tells buyers they should expect to pay a similar price for your home.   When real estate professionals add up all the sales of similar homes over the last 30 days and find the average price, as well as the full range from the highest to the lowest price buyers have paid, as long as there enough sales data to make a reasonable sample size, its a pretty good bet that your home will sell somewhere within that range.   By comparing your home to the average and adding or subtracting dollars for the replacement cost or upgrades that constitute the differences between your home and the average home, you can come up with the likely price and buyer will offer for your home. I am not being facetious here. That’s really how it is done.   Lots of homes, everyone a little different, but in truth, homes have a lot more in common than there are differences.  Appliances, floor covers, even paint and carpet are all relatively small costs when compared to the total price of the home.    Consider this, every home has a kitchen. The only difference between an expensive home’s kitchen and less expensive home’s kitchen is the cost it would require to make the less expensive home have the same kitchen as the more expensive home.   Same goes for bathrooms, fixtures, and every other thing that is built or developed on a piece of property.   Homes are made of sticks and bricks, and every house is valued based on what a buyer would pay for your home or a reasonable replacement. If a reasonable replacement for your home offered at lower price by another seller, then buyer will purchase that home or make a lower offer on your home to match what they think is the fair price.   So here is a secret hardly anyone knows. Homes sell at the lowest price any seller will accept for a home that is reasonable replacement for any home in the same general class and condition.   Sellers control the price of homes, not by adding up the value of the features and amenities of their home, but by competing with each other for buyers and cutting their price low enough to cause a buyer to make an offer on their home and not some other home that would otherwise be an acceptable substitute. The reason sellers cannot collude to inflate prices is there are simply too many of them.   The result is a fair market evolves where prices float to the natural level of the lowest price any seller will accept based on a free market conditions where buyers can shop and compare.   Real estate is not rigged.  If somebody is willing to sell their home for less than you want for your home, their home will sell and not yours.  When you decide to lower your price so that every other similar home listed for sale is a little more expensive then your home, then your home is the one that sells first.  Home prices rise and fall based on the supply and demand of the available homes.  The condition of the home is only an important determinant of price in relationship to the expectations of buyers with regard to the condition of all the other homes they are looking at in the same general price range.

Author: gordon

Nevada County Resident since 1988. Painting and Decorating Contractor 1985-2003 Nevada County Realtor Since 2004 Member of the Nevada County Masters Club (top producing agent) Every Year Since 2004