When selling your Boston home, it’s good practice to be aware of what similar homes in your neighborhood have recently sold for. Recent comparable sales are not only what a good Boston real estate agent should use for guidance when pricing your home, but also what a bank appraiser will use if and when your buyer applies for a mortgage to buy your home.
(Keep in mind though, that very rarely will you find a perfect “comp” for your home. Unless the home next door to you sold yesterday and it was exactly the same house, there is no perfect comparable for your home. A good Boston real estate agent should be able to come up with a list of five to ten comparable properties that sold within six months of the date of analysis. Your agent should then be able to make adjustments for location, size, condition, and other variables to come up with an appropriate suggested asking price for you home.)
But as important as recent comparable sales are in the process of appraising property, they should not be the only measuring stick you and your agent use when pricing your home. Even if the house next door to you is exactly the same as your home and it sold two months prior to the date you attempt to price your home, there are two other very important factors that you must be mindful of when pricing and selling your home: interest rates and inventory.
The effect that the interest rate has on the activity in the Boston real estate market and the economy as a whole can be classified as Economics 101. The more people have to pay in interest, the less they can pay toward the principal, and the less they can pay for your house. You must be mindful of this extremely important factor when attempting to price and sell your home. If the home next door to you sold two months ago, it may have been the same exact home in the same exact condition, however, the interest rate may have been lower or even higher when that home sold two months ago. The interest rate factor will greatly affect the sale price of your home and should be given a ton of consideration during the market analysis process. Your Boston real estate agent should be well aware of changes in interest rates and be able to answer any questions you might have on this topic.
The other factor that must be weighed when appraising value is the inventory of comparable homes on the market, which can sometimes be more important than recent comparable sales. If there were very few properties on the market like the home next door to your home when it sold two months ago, then it was a good market to sell in as “demand” was (most likely) greater than “supply.” If two months later you decide to sell and there are fifty other homes similar in size and condition on the market, then you will have a more difficult time than your neighbor did, as “supply” is (most likely) greater than “demand.” There are certainly exceptions to this rule and there are other variables that come into play, but the inventory of comparable homes and the “average days on market” of those homes should definitely be given strong consideration during the market analysis process.
(This is especially true when pricing and selling Boston condos, South Boston condos and Dorchester condos. Heavy condo development over the last five years has lead to a surplus in these areas. Your Boston real estate agent should be aware of the absorption rate and be able to inform you of the “normal” and “healthy” number of listings that should be on the market in your neighborhood at any given time.)
In conclusion, recent comparable sales will give you very good insight when attempting to arrive at an appropriate suggested asking price for your home, however, you and your Boston real estate agent must also be mindful of recent activity in interest rates and the inventory of homes you will be competing against if you decide to sell your home.
Rooney Real Estate is a full service residential real estate company servicing South Boston, the South Boston Seaport, and Dorchester for more than twenty years. In 2003 Rooney Real Estate was recognized by LINK, the Listings Information Network, as the top real estate firm in South Boston, MA, in total sales revenue. On May 10, 2005, MLS (Multiple Listing Service) listed Rooney Real Estate as the top firm in South Boston, MA, in total sales and total dollar volume thus far in 2005. Rooney Real Estate also has an unparalleled record of giving back to the youth sports leagues and non-profit organizations in the communities they service.
Call 1-866 ROON DOG, or visit www.rooney-re.com for more information.
Jay Rooney is a Vice President and a licensed Sales Agent at Rooney Real Estate, Inc., in Boston, Massachusetts. He is currently regarded as one of the top listing and selling real estate agents in the Boston real estate market and has won numerous awards for his real estate achievements. Email Jay at jay@rooney-re.com with questions about this article and for all of your Boston real estate needs. More information about Jay can be found at http://www.rooney-re.com
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