Coming up with a reasonable asking price is essential to selling a home in Wake County North Carolina. I have seen many examples of sellers who inflated the asking price for their homes, only to see it lag on the market for months.
One of the best ways to determine a solid asking price for a home in Wake County is to compare it to other sold homes in the area. This is often referred to as “comping” or finding “comps” to determine your asking price. Here are tips for comping your home in Raleigh NC…
What is a comp?
The word “comp” is short for comparable, meaning comparable-sale. Many times when selling a home the buyer, or agent, will ask a seller what comps they used when determining their asking price. It pays to be prepared with a solid answer at this stage in the home selling process.
In short, it is an informal way of determining a fair sales price for a single-family home. As a best practice, these comps are homes of a similar style, size, age, and in close proximity to the subject.
Comparable sales are ones that have taken place in an open competitive market under typical market conditions. This means excluding any homes that have sold under unusual market conditions such as: owner financing, foreclosure or REO properties, estate sale, bankruptcy, etc .
Why are comps important?
When selling a home, the buyer will most likely be obtaining bank financing. Banks will only loan on a percentage of the appraised value. If the property does not appraise at the agreed upon price, the bank may not loan the money, and the sale will most likely fall through!
The appraisal process is much more formal and complex, however all appraisers will select comps and include that in their determination of value. What real estate agents, and other home buyers, use is usually referred to as a Comparative Market Analysis or “CMA”. The CMA is designed to project the most likely sales price based on current sales data.
Tips for pulling comps in Wake County NC
To pull comps you must have a firm grasp of the property you are looking to buy or sell. This is referred to as the “subject property.” You will be looking for at least 3 properties that are as similar to the subject property as possible.
According to Modern Real Estate Practice in North Carolina, Fifth Edition:
“The more similar the comparable is, the more recently sold and the fewer adjustments that are required, the more reliable will be the estimate of value.”
Evaluate your comps according to the following criteria:
Sold date of comp
For a property to be a candidate for being a “comp” it must have sold recently. Ideally within the last 3 – 6 months, but no later than 1 year. Remember you are selecting these comps to determine the current market value, so using recent sales is important.
John Messner, a licensed broker and appraiser looks for:
At least 3 closed comps, 2 of which sold within the last 6 months, and none to have sold more than 12 months ago
Using at least 2 comps that have sold within the last 6 months is a good rule of thumb for coming up with a solid price when selling your home.
Distance of the comp
How far away is the comp from the subject property? For best practices you want to stay within .25 – .5 mile radius around the subject property. If this is not possible, you can go out to a 1 mile radius. This is common for more rural areas of Wake County such as Fuquay, Zebulon, Wendell, and even sections of Raleigh outside the city limits.
To ensure accuracy, stay within the same neighborhood. Since Wake County has seen a lot of development over the past few decades, subdivisions constructed by home-builders are very common. These communities offer similar style homes with similar floor plans, making it easier to find the most similar homes in close proximity.
Also, be careful not to use comps that are in another city. So, if your subject property is on the edge of the town of Garner, try to avoid using a comp that is located in the city limits of Raleigh.
Size/square footage of comp
Select comps that are similar in size to your subject property. Its best to find homes that are roughly within 10% of the subject.
For example, if your subject is 1200 square feet, look for comps that are from 1,000 to 1,300 square feet. If it is 2,500 square feet, try and find something between 2,250 and 2,750 square feet.
Compare apples to apples. So, if your subject is a single-story ranch, find other ranches and omit any 2 stories from your search. If the house is a split level layout, find other split levels.
Use similar bed/bath configurations. Choosing comps that are within +1 or -1 bedrooms and baths of your subject is a solid practice.
I’ve heard some debate on whether or not to make adjustments for an extra bedroom, because this can be accounted for in the square footage. However, and extra bathroom will add value. All things being equal, a 3 bedroom 2 bath will command a higher sales price over a house with 3 bedrooms and only 1 bath.
Search for properties that have been built around the same decade as your subject. If you have a 2-story colonial that was built in 1985, you’ll want to avoid comparing it to a 2 story home built in 2015. Better to find another 2-story colonial that was built between 1975 – 1995.
If the subject property has been built within the last 5 years, I recommend looking for similar homes withing a 5 year range as opposed to 10.
An exception would be if you have an older home that was built over 50 years ago. There were a lot less houses in Raleigh back then so you can broaden your range to 15 – 20 years.
Does proximity to noise/busy roads affect a homes value?
Any home that is located on a busy street will be more difficult to sell, and generally, will have lower value. I have seen many properties located on main arteries such as Wake Forest Rd in Raleigh, Maynard Rd in Cary, Timber Dr in Garner, and Knightdale Blvd in Knightdale that lagged on the market with a series of price drops.
You’ll want to compare it to other sold properties on main arteries keeping in mind that these house are more difficult to sell. Pay special attention to comparing houses with a proximity to road noise, commercial buildings, highways, and busy schools.
Making adjustments to the comps
No 2 parcels of real estate are exactly alike, and even after an experienced appraiser, investor, or broker is able to find 3 stellar comps, it is usually necessary to assign a dollar value to the differences between the comparable property and the subject property.
For example, a feature that is in the subject property and not in the comparable is assigned a monetary value and added to the comparable (granite countertops, extra bathroom, fireplace, screened in porch, etc).
If a feature is present in the comparable, but not in the subject, that feature is subtracted from the comparable. Adjustments are never made to the subject property, all adjustments are made to the sales price of the comparable +/-.
Remember, the best comp is usually the one that has received the least amount of adjustments.
Look at the following tables for an example comparable report. The fields have been shortened for brevity:
|Address||Distance||Year||SF||# Bed||# Bs|
|123 Raleigh Dr||N/A||2005||1503||3||2|
Assigning a dollar value to amenities to compensate for the differences in the property is more involved, and is outside the scope of this article. However, a nice trick I like to use is to look at the average price per square foot!
Add up the average ppsf from all 3 comps: 134 + 137 + 140 = 411 (411/3) = 137.
If the subject property is 1503 sq then and the average ppsf is 137 (1503 x 137) = $205,911. I’ve found this method to be fast, and pretty accurate–AS LONG AS the appropriate comps have been used!
Knowing how to effectively pull comps when putting your home up for sale is an important aspect of determining value.
If you would like to avoid the hassle of comping your own property and dealing with showings – Call/Text us at 919-473-6885, or send us an email
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