Ah, the Comp. It’s a word you’ll hear over and over again in real estate. Comp is short for comparable property, and it is how a real estate agent will arrive at a market value for your home. If you are the seller, your agent will use comps to arrive at a recommended list price. If you’re the buyer, your agent will use comps to help suggest a fair purchase price. You may think that sale price is the only factor when you’re looking at comps and trying to set a price for your listing. But it’s actually a bit more complicated. Here are five things that affect comps that you might not be aware of:
- New construction nearby: Because of low prices for lots and varying prices in home building materials, new homes can actually be cheaper and cost less per square foot than existing homes. If there’s a lot of new construction nearby, that can affect the price for your own listing. A seasoned agent can account for this by using comps that are closer in age to your property, and assessing the quality of the finishes in a new construction compared to the subject property.
- Renovations: Recently renovated homes typically sell for more than homes that haven’t been updated in a while. If you’ve recently upgraded your home–especially sought-after upgrades like the kitchen or master bath, your home should be priced appropriately.
- Developable lots: Not all lots are created equal. Even if the square acreage is the same, a lot that’s easily developable will get a better price than a hilly or rocky lot that needs a lot of preparation. In this same vein is the zoning of the property. If your lot is zoned for multiple dwellings, it can fetch a higher price than a single family dwelling.
- Listing price vs. sale price: Whether sellers actually get their asking price depends greatly on the market. When you’re pricing your home, it’s important to look at sales prices, not just listing prices. The listing price doesn’t always accurately reflect what a home will sell for. Be sure to take note of average list price vs sold price as well. If homes are consistently selling for over or under listing price, it can give you a good idea of what a fair market value would be.
- Location: Nearby amenities, safety, schools, and noise levels can vary greatly within a neighborhood. Homes in more desirable parts of the neighborhood will sell for a higher price, all else being equal. Walkability is usually a very desirable trait, and so proximity to amenities can be a boost your home’s value. Similarly, being on too-busy of a street can lower your home’s value compared to other homes.
At the end of the day, fair market value is the price a buyer is willing to pay and a seller is willing to accept for a property. The best way to get your home in front of the most qualified and serious buyers is to have a competitively and accurately priced home, something a seasoned real estate broker can help you with!
I took a fantastic class this morning dealing with a new law that was recently passed: starting January 1, 2018, anyone wishing to sell their home within Portland city limits (with or without an agent) must get a home energy audit prior to listing, and must provide the report with the home energy score (HES) to any prospective buyers. The HES is on a scale from 1-10, with 1 being least efficient and 10 being most efficient. Scores are based on BTUs used, and the majority of your score comes from heating, water heating, and cooling.
There is a lot of talk about the impact that these scores are going to have on the real estate market, and a lot of confusion as to what this is going to mean for sellers. I’ve taken some of the more important information that I learned and put it into an infographic for easy reading and sharing:
It’s important to realize that the requirement to sell only applies to the City of Portland (so if you’re in the Metro area, but not Portland proper you don’t have to have one). You’ll also want to note that you don’t need to make any upgrades or repairs based on the report. All you have to do is get it done and provide copies.
This city ordinance is still in early stages: they haven’t yet worked out everything, and will have a rule-making session in July to nail down some of the finer details. For instance, we don’t yet know how long an energy audit will be valid (but my guess is probably a year). Also condos are an area of concern because there are too many variables when you have units on all sides. Chances are that condos will be an exemption, but we won’t find out until July.
Even if you’re not thinking of selling next year, knowing your HES has great benefits. For starters, you’ll get a really clear picture of the energy efficiency of your home. The last page of the report shows upgrades that would increase the efficiency. It is broken down into 2 categories: update now, and update later. Alongside these repairs, your report will give you the estimated annual savings by making the change.
I’ll update once we know more about this new ordinance, but as always, feel free to reach out with any questions you have!
Not all home improvement projects are created equal. Some renovations may cost a lot but not add significant value to your home. This tends to be the case for things like room additions, which almost always cost more than the added value onto your home. This list goes in the opposite direction: Here are some inexpensive home improvement projects that will not only increase your enjoyment of your home, but will also increase the home’s value.
1. High Quality Ceiling Fans
In a recent National Association of Home Builders survey, ceiling fans ranked No. 1 as the most-wanted decorative item. If your ceiling fans are outdated, spending a few hundred dollars to get new ones is well worth the investment. Firstly, a new ceiling fan is practical. If they haven’t been updated in a long time, chances are a new one will be more energy efficient. Replacing the standard cream colored fan will make your home feel instantly less dated as well. Aside from that, the new look can give your home a high-end feel that isn’t as costly as other finishes.
Mature trees can be worth as much as $10,000 toward the value of your home. Trees also protect your home from the elements and prevent erosion. A nice, shady tree in the yard can do wonders for your curb appeal, as well. It’s a good idea to talk to an arborist about what trees to get and where to plant them. This way, you can ensure that you don’t plant too close to the house or accidentally bring in an invasive species. Another positive to talking to a professional: if your trees are still young, buyers may be concerned about how big they’ll grow and any issues with roots spreading. Having the arborist’s professional opinion will put buyers at ease and they can instead think about that great tire swing they’ll be able to put in.
3. Energy Efficiency
Buyers are increasingly interested in saving energy, so any efficiency update is worthwhile. Like the ceiling fans, most electrical items will increase the energy efficiency of your home simply by being newer. One of the most popular energy efficient updates we’re seeing is people installing smart thermostats in their home. Most likely, you’ve heard of Nest, which runs for around $250, and can save you a ton of money in yearly heating costs. Generally easy to install, it’s a quick way to bring your home into the future, and give your home an stand out selling point.
4. Outdoor lighting
Exterior lighting is great for highlighting the accents of your home. It helps tie the interior and exterior into one living space. Lighting fixtures on a back patio will give the impression that the space is finished and all the new owners will need to do is set up their furniture to start entertaining!
You can finish a room with crown molding or railing for as little as $1.50 per foot if you take a DIY approach, and it’s extremely desirable among prospective buyers. Just that little addition makes a room seem richer, and coupled with a your new ceiling fan, can turn an average living room into a high-end one for way less than a full remodel!
Hopefully, this has given you some ideas for ways to gain value in your home without having to spend a ton of money. Even if you’re not ready to sell yet, these updates are a great idea to improve your home’s worth and your quality of living!