Why smart agents research sold, pending and active comps

Key Takeaways

• Mimic what an appraiser will do when looking at sold comps.
• Use pending comps to determine what types of properties buyers are trending toward.
• When you have no comps — especially for unique listings — learn to trust your gut instinct.

When determining pricing for houses, smart agents will look at sold comps, pending comps and active comps.

When you look at sold comps, you want to mirror what an appraiser is going to do. Appraisers are under strict guidelines — they often can only be within 20 percent difference in square footage from comp to comp.

Usually appraisers are required to use a comp that sold within the past six months. Ideally they want to compare within a mile radius, but they’ll sometimes make exceptions. They also try to match the levels a home has — if a house has a basement, for example, they try to find comps that have partial below-grade square footage.

When I look at comps, I try to understand the appraiser’s process, but I also follow my own personal instincts. I evaluate how buyers are likely to react to each home based on what I’ve learned about those buyers’ specific wants and needs.

Pending comps show you what buyers are actually taking action on now. Sometimes I’ll look at pending comps on homes that are in a similar area but are maybe smaller or bigger than the house I’m listing, because I want to see what buyers are trending toward. Why did they pick that house over other listings? That house will give clues to what buyers are taking action on, which will help me establish the pricing of my upcoming listing.

Active comps are a valuable tool. They’re not typically used in a traditional appraisal sense, but active comps are what you’re actually going to be competing against.

What I try to do is put myself in the place of the potential buyer. If I can predict what homes they will be comparing my listing to, I can see how we stack up to the competition and share those findings with my sellers.

This process helps me have the conversation with sellers about finding the right price. I might say, “There are only so many homes that sell in this area in this price range in a given period of time. Yet there are X number of homes listed for sale. Here is how we stack up to the competition; therefore, we should list your home at X price.”

I talk to them about what happens if they start too high, and why we don’t need to list it as low as some of the competition.

What do you do if you have no comps? You can’t identify a single home similar to the house you’re listing that sold recently. Maybe your listing has a great view but all of the homes surrounding it that sold in the last year don’t have that view.

You know a spectacular view can greatly increase your asking price, but you don’t have the comps to calculate by how much. This happens all the time when you have a unique house, and if you don’t have the comps to support what you think it’s worth, you struggle to figure out the right price for the home.

With all listings — and unique ones especially — you need to go a little bit on gut. With experience, you might see that your gut hunch about what a home might sell for is often right on target. With training, and by learning to listen to that gut instinct, you’ll gain confidence when dealing with unique homes.