How to Pick a Sales Price Without Comparable Sales
Trying to pick a sales price when there are few to none comparable sales is a little bit tricky in our Sacramento real estate market, but this is when an experienced real estate agent can be very helpful. Sometimes it comes down to relying on gut instinct, mixed with a bit of pixie dust sprinkled on top of those dusty old comparable sales, to come up with an accurate and reasonable number.
Further, I might do goofy things that are right on target such as grab a random sales price from 2005, divide it in half, multiple that result by 50%, and then slap another 25% on top to arrive at an estimate of value, which is often much closer than Zillow’s screwy Zestimate and computed about in the same fashion. But that’s just to double-check the ballpark. It’s not to pick a sales price.
When talking with a seller who just closed escrow yesterday on a fixer home I had listed, we had discussed the sales price and reviewed how we arrived at the final number. I confessed that it wasn’t based entirely on the comparable sales. My input was based a lot on how much I thought we could get for the property, resulting in the intrinsic market value of that home. The seller laughed and said he realized I had grabbed it from thin air when I made the recommendation.
Well, I wouldn’t say thin air. But it was an educated guess. It was an educated guess because although I had examined the comp prices for turnkey homes, I had not arrived at a value for the unknown condition of the property, which was basically trashed. I had been expecting to see a home in move-in condition. These types of homes are a bit difficult to price when the home has so much wrong with it that you can’t even figure out which part of the house you’re standing in. Oh, this must be the living room, I muttered to nobody, when it dawned on me where I was as the floor suddenly sloped down under my feet.
After hitting the market, lots of agents called to give me push back and to complain about the price. They thought it was too high. Many offered substantially less. They moaned and groaned. Hey, give the sellers what they want, I suggested; it’s simple, just do it. Don’t yak at me about the comps and your honorable intentions. Put up or shut up. Then, two buyers submitted offers that were very close to our asking price, and those were the two buyers we worked with, closing with the best offer and zero renegotiations during escrow.
Sometimes, you just get lucky trying to pick a sales price, but it helps to have experience on your side when you’re the seller.