Not all houses have good comparables. It might be the biggest house in the neighborhood (where we expect a lower cost per square foot), a contemporary amongst traditional homes, an odd shaped home (octagon) or simply a house in an area that has not had a lot of sales recently. How do you price one of these homes as either a seller or a buyer? A full appraisal might help but that is an opinion too. The traditional appraisal looks at comparables so we’ve got the same problem.
This is what I did for a resale property: I took the previous sales price and took that as the base price. It was the market price at the time. I couldn’t tell if there were seller paid closing costs or other concessions. I then took the data from the Case Shiller Index and applied it to the base price through today. There was conversation about the specific neighborhood beating the Index; real estate is local of course. Using a Trulia Heat Map, we discovered that the neighborhood over the last few years has been ahead and behind Portland at times but has converged to even now.
We had a list of seller completed remodel items. We placed the buyer’s value to each. Our offer price: (base price) * (Case Shiller appreciation (depreciation in the last few months)) + (Trulia Neighborhood Heat (zero in this case)) + (Buyer’s valuation of Seller’s remodel and projects). The offer comes out at 91% of the asking price.
The seller countered. They have had activity and only a short time on market so they *think* it is worth more. Would you?