Living in Contra Costa County

Figuring the value of a home and what price to list it at can be one of the biggest challenges we face as agents. If you read my post you know that price per SF is a number I like. It is not perfect, but it is a good starting point.

Just to give you an idea of some of the considerations and agent may use, I had a client in East Contra Costa County call me about a home evaluation. In this market there are rapid price changes and it is wise to try to find very recent comps. I love to find homes that are nearly identical to compare for sales, but you cannot always find those. The first thing I did was to check recent sales and what is currently on the market. This gave me an idea of what homes where going for on a SF basis in that community.

However, there were other considerations. There home is not particularly new or fancy, it is about average for the community, but it has the most fantastic backyard. It is very large with terraced gardens and fruit trees (at least 10 varieties). The area is a nicer area too.

So after looking at the average price per SF I looked at what homes in their immediate neighborhood where selling for versus the rest of the community. Homes in their area are selling for about 30% more per SF than elsewhere in town.

Then I looked at homes with large lots, those homes were selling for about 20% more than the average house.

Then I looked at different types of home sales. The bench mark on price is being set by bank owned homes, short sales are going for about 20% more than bank owned homes and traditional sales are about 50% higher than traditional sales.

Lastly I focused on the make up of the home. There are a lot of older homes with only 1 bathroom, fewer than 3 bedrooms, and no garage or maybe just one car. All of these types of homes have a negative economic impact as they are not as desirable. Homes about the size of theirs are selling at 20% above market.

Now those of you at home who are not trained professional be careful. I can just see some one going, “OK let’s add 30% + 20% + 20% + 50% + 20%. Gee this home is worth 140% over market for similar sized homes.” Now back off. There are several problems with this. We do not know if the home will be a short sale or a traditional sale, it depends on the other price factors. (I’ll give you a hint – at the end of the day it is going to be a short sale either way.) But you cannot just add all the modifiers some of them overlap. For example some of the homes in their neighborhood might have large lot and be about the same size and style, so the factor is somewhat built in to three different areas. Bank owned and short sale homes may be going for less because they are in poor condition. A nice bank owned home or short sale may actually sell as well as a traditional sale.

So what do we do? We look for comps with only some differences. Like maybe a home about the same age and size in that neighborhood, but with a small lot. There might be another one about the same size with a big lot, but in another neighborhood. Then we make only one or two adjustments to arrive at a closer price. We look to see if we can get several homes to line up this way. Then we have about hit the right price.

Then you have another problem with pricing. No matter how nice the home and how much more it may be worth due to its condition it will be hard to get buyers to look at it if it is priced too much over other comps on paper. A good Realtor can get around this with clever and aggressive marketing, but sometimes it pays to price low to get buyers through the door and see if you can get multiple offers.

No final price should be determined without inspecting the home in person. I provide on line evaluations, but always qualify that I need to see the home to reach a better number. I also try to inspect the available comps.

Each home is unique and if you want a Free evaluation of your home please let me know.

If you are interested in Buying a Home or Selling a Home in Brentwood or anywhere in East Contra Costa County, Antioch, Oakley, Discovery Bay, Pittsburg and others please contact me. I specialize in helping buyers of Bank Owned Homes. For regular updates please subscribe to this blog.

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