“Expired’s,” “Cancelled’s” Loom Larger

Until a few years ago, I never spent much time looking at Expired or Cancelled listings when I was preparing a Comparative Market Analysis (“CMA”).

Today?

Depending on the part of town and property type, that’s often where I start.

If you don’t take unsold listings into account these days — especially when they dominate nearby activity — you risk seriously overpricing.

Magic Number:  Three

Traditionally, of course, the guts of a CMA consisted of the three most similar properties that have sold nearby in the last six months (or sooner).

Once you have such a peer group, step #2 is to go through a series of adjustments taking into account differences between each of the Comp’s and the subject property.  See also, “Why the Neighbor’s House Usually Isn’t a Comp“; and “Bracketing,” Explained.”

So far, so good.

But what if there aren’t three, good Comp’s?

Or several Active listings instead got yanked from the market after going nowhere, fast?

Compare-and-Contrast

At least to me, the last asking price of any such home(s) establishes a ceiling for the prospective new listing.

In fact, considering that the average Twin Cities home now sells for about 92% of original asking price, I think it’s appropriate to discount 10% – 15% from the last asking price of a comparable Expired/Cancelled listing.

My logic:  if a serious Buyer had shown up with an offer within 85% or so of the asking price, a realistic Seller would have found a way to work with it/them.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

Leave a Reply