How do you compare homes when no two properties are exactly the same?
It’s true that real estate pricing can be tricky because no two homes are created equal. In other industries, pricing is more standardized because the product is a commodity that is universally the same everywhere you go. In real estate, you’ll quickly find that each home is unique with its own list of pros and cons. However, that doesn’t mean homes cannot be compared to one another.
What’s step one in the process of setting a fair market price? Comparing properties within a neighborhood regardless of their differences.
- While homes may not have the same number of bedrooms or the same lot size, there are still ways real estate agents are able to evaluate properties and make educated decisions, based on math, on the most realistic trading range.
The reason pricing matters so much is that the final sale price of one home has a measurable impact on all the other homes in a neighborhood as well.
- Some of the factors that get taken into consideration when pricing a home are demand for homes in the neighborhood, inventory levels, and recent sales trends for similarly sized homes in that neighborhood or zip code.
The most important takeaway is that you can absolutely compare homes even if they aren’t completely comparable. While each home’s value may differ a little bit depending on that home’s attributes, agents always take into consideration what the other homes on a street are worth as well.
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