“What’s Sauce for the Goose is Sauce for the Gander”

I know of other agents — even some whom I consider excellent** — who use price opinions at least occasionally to inform the guidance they offer Sellers.

Personally, I’m not a fan, for two reasons.

Reason #1. Something like 90% of the time, price opinions aren’t necessary.

That’s the case when what Realtors and Appraisers call the “subject home” is relatively straightforward — no one-of-a-kind features or amenities, and there are sufficient Comp’s (“Comparable Sold Properties”) to price off of.

The magic number?

Three (at least) in the last six months (max).

Then, arriving at a suggested price range, plus/minus 3%, is simply a matter of identifying the key differences (called “Adjustments”) between the subject home and the Comp’s, then assigning an estimated dollar amount to them.

The resulting analysis, called a Comparative Market Analysis (“CMA”), is straightforward if not mechanical in arriving at a suggested fair market value.

(No more jargon, promise.)

Reason #2

Of course, that leaves the 10% or so homes that are truly unique.

That can be due to a unique setting; architectural design; floor plan; building materials; amenities — or, most likely, a combination of all¬†of those things.

When that’s true, by definition, finding good Comp’s is difficult if not impossible.

But then, that pricing challenge confronts not just the would-be home seller and their (listing) agent, but prospective Buyers, their agents, and — once there’s a deal that’s past inspection — the appraiser representing the Buyer’s lender.

Pricing Vacuum

What to do?

Suffice to say that Sellers have considerably more discretion pricing a truly unique home (typically, very upper bracket).

It’s certainly possible to come up with a broad price range for one-of-a-kind homes, factoring in such things as replacement cost.

Ultimately, however, fair market value is whatever the Buyer and Seller, dealing at arm’s length with no duress (rules out foreclosures), agree it is . . .

**I suspect that at least a few agents soliciting price opinions know exactly their recommended price range — and instead are simply doing another kind of pre-list networking (sometimes with the inducement of a $10 Starbucks card).

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.

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