Most real estate agents are not good at accurately pricing a property. This blog is designed to remind today's realtors and real estate agents how to price a property. When you sat through all those classes to get your license you learned, how to value a property. You were even tested on this information when you took your licensing exam.
The best (and correct) method for determining the value of a typical single family residential property, is to use the market data approach to find the value. The market data approach, also known as the sales comparison approach is an accurate method to price a home and is very easy to do. This is the method real estate appraisers use for most residential properties.
The theory behind this method is simple. The following definition and example are taken from about.com.
Definition: The Sales Comparison Approach compares recently-sold local similar properties to the subject property. Price adjustments are made for differences in the comparable and subject property.
Examples: A simple example would be a home (Home A) with 3 bedrooms,2 baths and no garage. If we want to estimate it's value to a comparable home just sold:
1. Comparable Home B sold recently for $150,000. It also had 3 bedrooms and 2 baths. but has a 2 car garage. The garage is valued at $4000.
2. We subtract the $4000 from the value to arrive at a comparable value of $146,000 for our subject Home B.
Adjusting the sales price of three or more comparable sales will give you a good indication of the value of the subject.
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