Using Sold Listings As Comparable's Just Doesn't Cut It Anymore

Real Estate Agent with Platinum Real Estate Group

Using Sold Listings As Comparable's Just Doesn't Cut It AnymoreLast year, when doing a CMA (current market analysis), I would use recently sold properties as comparable's. I would try to find homes similar to my clients property that had sold within 3 months to base my assessed value off of.

At the start of July, after the first time home buyer tax credit expired, I started to notice a trend in my market. Homes were starting to sit on the market longer and there were many sellers dropping their prices in order to get their homes sold. This caused a lag in pricing for some of my sellers as they weren't keeping up with this trend. (Totally my fault!)

As a real estate agent the most important thing I can do for my seller clients is to give them accurate information when helping them price their homes. If their priced to high their home will linger on the market costing them and I more money. I had to find a new way to get my clients homes sold.

So, I had to change the way I worked with my sellers. I had to completely change the way I determined a price assessment. I now base all of my CMA's off of active listings. Sold listings just don't cut it anymore. 

Sold Comparable's Just Don't Cut It Anymore! You Have To Look At The Current Competition.

If you want to sell your home, and you're competing against short sales & REO's (bank owned homes/foreclosures), you have to be competitive. It doesn't matter that a home in your neighborhood sold 2 months ago for $200,000, you now have two short sales in your neighborhood priced at $180,000. You have no choice but to price competitively, or you won't sell.

No longer does a sold home matter when pricing your home with today's market. Home prices are changing everyday, and if you don't price ahead of the trend, you're going to be losing a lot of money. From now on, I only use active listings as comparative properties, otherwise, I would be doing a disservice to my clients. They have no hope of selling if there are 5 properties just like theirs priced 10% below last months market value. It just won't work. 

To all you home sellers out there, if you want to your home to sell, you have to be better than your competition and that's it. What sold last month doesn't matter anymore. It's all about who's selling today. Your neighbors determine your selling price; not your agent, not your equity, not our commissions. 

To all you real estate agents out there, if you want to get rid of your long standing inventory, you better start looking at active properties. You better start learning how to calculate absorption rates, and you better up your game. It's your job to get that home sold, and if you're pricing based on what sold last month, your way behind the curve. 

Comments (12)

Natalie Flaming
Metro First Realty - The VIP Team - Oklahoma City, OK
Oklahoma City Real Estate

I've been utilizing the actives, pendings, and solds comps from day one.  That truly is the best way to get the most accurate price point.  I show my sellers the pendings so they know what prices are at least "getting an offer".  In the case of last year however; we really needed a crystal ball.

Jan 14, 2011 10:07 AM
Lisa Udy
Platinum Real Estate Group - Logan, UT
Logan Utah Realtor

Hi Natalie,

I truly feel sold listings in my market place have no baring on where we should price a home when listing it. The market is moving to fast. I sure wish I had a crystal ball! :)

Jan 14, 2011 10:10 AM
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

GEEZ!  Home prices these days are a moving target. You have to lead it if you expect it to fly through the shot stream. 

Jan 14, 2011 10:34 AM
Doug Rogers
RE/MAX Coastal Properties - Destin, FL
Your Real Estate Resource!

I use solds to help ground prospects to reality. "But the neighbor's home was listed for 299k". Yep, but they sold for 265k! I still like my solds!

Jan 14, 2011 11:30 AM
Barb Szabo, CRS
RE/MAX Above & Beyond - Cleveland, OH
E-pro Realtor, Cleveland Ohio Homes

Still like my solds too but the actives are a major player like never before!

Jan 14, 2011 12:09 PM
Matt Grohe
RE/MAX Concepts - Des Moines, IA
Serving the metro since 2003

Lisa: Great points. Sellers are more receptive than ever before to actually want to look at current market data and factor it into their pricing.

Jan 14, 2011 01:51 PM
Michelle Gibson
Hansen Real Estate Group Inc. - Wellington, FL

Lisa - I always take Actives & Pendings into consideration, but usually focus on recent sales especially at certain price points.  In most cases our "actives" are still active because they're over priced, so the sales are usually the most reliable, but every market is obviously different.

Jan 14, 2011 02:14 PM
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

No doubt about the fact you need to use them especially when the market is dropping!

Jan 14, 2011 11:47 PM
Rob Thomas
Prestige Homes of The Tri Cities, Inc. CALL....423-341-6954 - Bristol, TN
Bristol TN-VA & Tri Cities Agent, ABR, GRI, e-Pro

Lisa...that's exactly what I've been telling sellers for 6 months....If you want to sell you have to know what your competition is rather than sold comps. Nice post!---Rob

Jan 15, 2011 12:25 AM
Tammie White, Broker
Franklin Homes Realty LLC - Franklin, TN
Franklin TN Homes for Sale

Lisa, I think this perspective is valid. I do find it interesting because I wrote a post about this subject very recently. One agent said the only thing that mattered were solds. His thought was actives and expireds were totally irrelevant. I'm not sure what his clients think about that approach. 

Jan 15, 2011 01:12 PM
Craig Frazer
Farmington, UT
Real Estate, RE/MAX Metro, Davis & Salt Lake County

Lisa, great points.  It can be difficult to educate sellers on the need (critical need in today's market) to price in anticipation of the market not in reaction to it.  I've noticed it can take a while (and other properties selling before theirs) before they begin to fully understand and adapt to that strategy.  To your point, active listings (and for me under contract listings) are playing an ever greater role in price setting. This doesn't even address the issue related to appraisal comps....that's a whole other topic.

Jan 19, 2011 11:24 AM
Ronnie George
Keller Williams Realty, Cenla Partners - Alexandria, LA

Great post. I like using solds and actives to get a range and adjust accordingly to demand in a particular area.

Jan 21, 2011 10:50 AM