“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.