Whether you’re buying or selling a Portland home in metro Portland real estate, you’re probably crunching numbers based on “comps”, that is, on recent comparable sales. While this sounds like a straightforward concept, for many people it ends up feeling opaque and complicated. Over time, most real estate agents develop a clear sense of which houses are truly comparable to each other when it comes to setting prices. It’s important to get this right for several reasons. A house priced too high for the market is probably going to stay on the market for a while. When buyers see that a house has been for sale for a couple of months, they will often wonder if something is wrong with it. Eventually, sellers may have to drop the price of their home and end up selling it for less than they would have if they had better understood market conditions and comparability of houses.
In order to come up with a price for a Portland home based on comparable recent sales, there are a couple of factors to keep in mind. The first is the age of the home. Houses are usually compared within a range of five years. An older home is usually thought to need more repairs, though that can be mitigated if the owners have done a lot of upgrading. The other factor to consider is the direction the market is going. Most comps are made with reference to housing sales from the last one to three months.
It’s easy for sellers to believe the market will improve, that their house is special, and that they should price it higher to get the best deal. If there’s a big disconnect between what the seller wants to ask and what the agent thinks is reasonable, it’s time to sit down and have a conversation. For sellers, there is a lot of emotion wrapped up in the house. For the agent, it’s easier to be objective, because a house sale is just business. Most sellers find themselves happier when they listen to the advice of their agent on house prices, because the house sells faster and at a better price if the initial asking price is in line with the market.