When Jake came by to meet me and check out the home I was thinking of listing last year, he came armed with comps, which is real estate shorthand comparable sales. These usually include homes of a similar size in a similar neighbourhood, that sold in the last few months, maybe even up to 2 years ago. They provide the raw data that determines what your home is worth – but like all data, it needs to analyzed and interpreted to make sense, and that process can be really different from case to case.
This post is about one way to analyze comps, one that worked in my case. But it’s a big topic and one we’re planning to come back to often on this blog. What works in one situation may not work in another, so be prepared to look at the comps for your home in a variety of ways.
In my case, there were a healthy number of comparable sales in my area, though none of them seemed like a dead ringer for my place. My house was in Williamsville, a Kingston neighbourhood that has a wide range in the size and condition of the homes, so while there were plenty of comps to consider, they varied a lot. Jake subjected them to a bit of math that really helped clarify what my house was likely worth on the market.
He took the comps that had sold (not expired) and then compared the recent selling price to the price the last time that same home sold. He took the new sale price, minus the older sale price and then divided that by the number of years between the transactions.
Recent Sale Price − Previous Sale Price ÷ Number of Years between Sales = Average Yearly Increase
Once this was done for all the comps, we averaged it out and applied it back to my house. With some tweaking for upgrades like new windows and furnace, and legal duplex status, it helped us set a listing price that was right on the mark. In fact, as I’ve mentioned before, it sold before we even finished the listing process.
As a seller, I think formulas like this one help take things out of the realm of instinct and ground it in something tangible. Your agent should be able to explain and back up their pricing reasoning, and share the way they analyzed the comps with you.
NOTE: This is part of a new blog launched by the Caldwell team. I’m Stephanie, and I’m a writer sharing some of my own thoughts as a homeowner, but mostly working with Jake and Anne to get their thoughts and expertise out into the world.