If you read the first and second posts from the "how we sold our house in a week" series, you know that I didn't finish. Let's take a stab at that, shall we?
In the second post, I spoke about pricing. When deciding how much to ask for your house, you should look at comparable homes that have recently sold (not houses that are currently for sale). These comparable homes, or "comps", should be similar in size and condition to yours.
However, if you're not a realtor, you might not be able to see pictures or descriptions of the condition of many sold properties in your area. Zillow and your county assessor might only provide the size of the house, the date it sold and for how much.
If you don't have enough comps whose condition is already known, you can make an assumption about the comparable houses' condition based on the price per square foot. Here's how to do it.
In your list, have the following headings:
Address Bed/Bath SquareFootage Date Sold Amount Sold Price/Sqft
Jot down all the relevant information and then calculate the price per square foot: Amount Sold/Square Footage = Price Per Square Foot. So a house that sold for $60,000 with 1700 sqft sold for about $35/sqft.
Now look at your list. The prices per square probably fall into about three categories: really low, middle range and high. Depending on your neighborhood, how many houses fall into each category can change, but there will still generally always be three categories.
For the example I'm going to use, let's assume a neighborhood where the average house is a 3 or 4 bed, 2 bath with 1800 square feet and sells for about $130,000, and the prices per square foot range from $50-80/ft. Like this one I found on Zillow:
1) Cheap - Fixer Upper
2) Average - Decent and Clean
3) High-Priced - Remodeled and Wow
In the second post, I spoke about pricing. When deciding how much to ask for your house, you should look at comparable homes that have recently sold (not houses that are currently for sale). These comparable homes, or "comps", should be similar in size and condition to yours.
However, if you're not a realtor, you might not be able to see pictures or descriptions of the condition of many sold properties in your area. Zillow and your county assessor might only provide the size of the house, the date it sold and for how much.
If you don't have enough comps whose condition is already known, you can make an assumption about the comparable houses' condition based on the price per square foot. Here's how to do it.
Make your list and check it twice
Make a list of properties that sold within about a mile of your house within the last 6 months. You should have at least 10. If not, expand your search by time or by distance (but don't cross any major streets that drastically change property value).In your list, have the following headings:
Address Bed/Bath SquareFootage Date Sold Amount Sold Price/Sqft
Jot down all the relevant information and then calculate the price per square foot: Amount Sold/Square Footage = Price Per Square Foot. So a house that sold for $60,000 with 1700 sqft sold for about $35/sqft.
Now look at your list. The prices per square probably fall into about three categories: really low, middle range and high. Depending on your neighborhood, how many houses fall into each category can change, but there will still generally always be three categories.
For the example I'm going to use, let's assume a neighborhood where the average house is a 3 or 4 bed, 2 bath with 1800 square feet and sells for about $130,000, and the prices per square foot range from $50-80/ft. Like this one I found on Zillow:
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Know thyself
The three sets of numbers correspond to one of these three categories:1) Cheap - Fixer Upper
2) Average - Decent and Clean
3) High-Priced - Remodeled and Wow
Cheap Houses: The houses with a low price per square foot are the cheap fixer uppers. In our example neighborhood these would be $50-60/ft. They're cheap because they usually needs tons of work, and were a foreclosure or an investor bought it to flip or rent. These houses probably need a full remodel (we're talking orange countertops and dark brown paneling) and might even have structural or mechanical problems (like foundation problems, or needs a new roof or A/C).
Average Houses: These houses are decent and neat on the inside, with the condition ranging from some updates to a lot of modern updates. They're clean, but not completely updated. It might need new tile in the bathrooms, or still have that old wood paneling in a living room, but in general, you do feel as though this place has been maintained, has some modern touches and is move-in ready. The majority of houses in your neighborhood will be like this.
High-Priced Houses: This is the house whose price shocks you as much as the amazing remodeled condition. In our example, it's priced at $80/ft. There will only be a few of these. It was probably completely remodeled (likely by the investor who bought it for $60,000 six months ago). It could also be a homeowner whose upgrades were "too nice" for the neighborhood but wants to get his money back, or maybe even a homeowner who arbitrarily decides his house is worth it, and some poor buyer paid too much.
Hopefully not all of your comps are lacking a description or pics. Using the price per square foot method to guess condition is obviously not as reliable as seeing pictures and reading realtors' descriptions.
But go ahead and take a look at sold comps that you DO have pics and descriptions for, and already know the condition: does its price/sqft line up with the ranges you see in your list? It almost always does. Pretty nifty.
Next up: Make it look stunning.
Hopefully not all of your comps are lacking a description or pics. Using the price per square foot method to guess condition is obviously not as reliable as seeing pictures and reading realtors' descriptions.
But go ahead and take a look at sold comps that you DO have pics and descriptions for, and already know the condition: does its price/sqft line up with the ranges you see in your list? It almost always does. Pretty nifty.
Next up: Make it look stunning.
2 comments:
Wow! That sounds too good to be true. But I agree with you; there are guidelines and procedure that one must follow to make such a transaction within a week. Your post is an eye-opener, I am sure people like me who have never sold a house have really benefited. Many thanks for all these info!
Doyle Hunt @ Real East Van
I was very impressed by your blog. My wife and I are attempting to sell our house and are having some trouble so we have been looking for suggestions. The comparisons between cheap houses, average houses, and high priced homes was especially helpful. I am not sure what you do for a living, but you would do well in real estate.
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