How to price a listing with comparable sales: a worked example
Price a listing by choosing three to five recent sales that a buyer would really cross-shop with the home, adjusting each one for the differences you can put a dollar figure on, and reading the spread of the adjusted prices as a range. The list price is a decision inside that range, made with the seller. The numbers below are invented to show the method.
A seller will forgive a price that took a week to reach. They won’t forgive one they can’t follow. When you can show the three sales you used, what you changed on each and where the range came from, the conversation is about the house. When you can’t, it turns into a contest between your number and the one their neighbour heard at a barbecue. This post walks one example from start to finish.
Step 1: pick comps a buyer would actually compare
A comparable sale is a home a buyer could have chosen instead of yours. Start tight and loosen only when you have to.
- •Close in distance: the same street or neighbourhood first. A different side of a busy road or a rail line can be a different market.
- •Close in time: the last few months. A sale from a year ago was priced in another market, so use it only to show a trend and say so.
- •Close in type and size: a semi against a semi, a similar bedroom count and a similar lot or floor area.
- •Sold, not just listed: a sold price is what a buyer paid. An asking price is what a seller hoped for.
Keep a note of why each home is in the set, and of the one you left out. The seller will ask about the one down the street.
Step 2: adjust each comp toward your home
No two homes match. Adjust the comp, not the subject: if the comp has something yours lacks, take value off the comp’s price, and if yours has something the comp lacks, add it. Only adjust for differences you can support, such as size, a garage, a finished basement, a renovated kitchen or a lot that backs onto a park. Anything you can’t put a figure on, keep as a note.
Here is an invented example. The home is a 3-bedroom semi of about 1,400 square feet with a garage and an original kitchen. For the example, assume local sales suggest about $300 per square foot for size differences, $20,000 for a garage, $15,000 for an updated kitchen and $10,000 for backing onto a park. Your own adjustments come from your market, not from these numbers.
| Comp | Sold price | Differences from the subject | Adjustment | Adjusted price |
|---|---|---|---|---|
| A | $760,000 | 100 sq ft larger, kitchen updated | -$30,000 and -$15,000 | $715,000 |
| B | $705,000 | Same size and kitchen, no garage | +$20,000 | $725,000 |
| C | $735,000 | 20 sq ft smaller, backs onto a park | +$6,000 and -$10,000 | $731,000 |
The adjusted prices run from $715,000 to $731,000, a spread of $16,000. The average is about $723,700. A tight spread like that says the comps agree. A spread of $80,000 says one comp is wrong for this home, or the market is thin, and you should say so out loud instead of averaging it away.
Step 3: look at the competition, then the days on market
Sold comps tell you what buyers paid. Active listings tell you what they can choose from today. Suppose a similar semi two streets over has been listed at $749,900 for 38 days with no change. That doesn’t make your home worth $749,900. It tells you a buyer shopping at your price will see a higher-priced alternative that isn’t moving, which helps you if you price inside the adjusted range.
Days on market belongs in the table too. A comp that sold in four days and over asking was priced under the market. One that sat 60 days and took a cut was priced over it, and its final price may understate the home. Note both, and give them less weight than a sale that went the usual way.
Step 4: turn the range into a list price
The range from the adjusted comps is evidence, and the list price is a strategy. In our example, $715,000 to $731,000 supports a list price near the top of the range, for instance $729,900, if the seller wants room to negotiate and the market is active. It supports a price at the bottom if they want to draw several buyers fast. Which one is right depends on how many buyers you expect, how quickly the seller needs to sell and whether you plan to hold offers.
- •Write down the range and the price you recommend, and the reason for the gap between them.
- •Agree the review date at the same meeting: if there is no activity by then, you look at the price together.
- •Use the net sheet at the recommended price so the seller sees what they take home, not only the headline.
Mistakes that move the number
- •Anchoring on the highest sale: the best comp on the street may have had a pool, a rebuild or a motivated buyer. Check why before you lean on it.
- •Adjusting everything: twelve small adjustments suggest a precision you don’t have. Adjust for the big differences and note the rest.
- •Letting the seller’s number set the comps: if you pick comps to reach a figure the seller wants, you are building a story. Pick the comps first, then talk about the number.
- •Skipping the condition: a home you haven’t been through is a guess. See it before you give a figure, and say what you assumed about the kitchen and the mechanicals.
Frequently asked questions
How many comparable sales should I use?
Three to five is usual. Fewer than three gives you no spread to read, and more than five tends to pull in homes a buyer wouldn’t compare. In a thin market, use what exists and say that the set is thin.
How recent should comparable sales be?
The last few months is the common starting point. Go back further only when nothing recent exists, and tell the seller that an older sale was priced in a different market.
Should I use active listings as comps?
Use them as competition, not as value. A sold price is what a buyer paid. An active price is an ask that may or may not ever be paid.
What do I do when the comps and the seller disagree?
Show the adjusted table and ask which sale they would remove and why. If they have a real difference you missed, adjust for it. If they only want a higher number, agree the review date and price the home where the evidence points.
How Listing Launchpad handles pricing evidence
Listing Launchpad was built so the work you do to price a home ends up in front of the seller in a form they can follow. Its listing presentation is a private web page for one seller, and the pricing section works the way this post does.
- •The comps and the range together: you set the likely price, the low and high ends and your reasoning, and add each comp with its address, a note, the price and the days on market, with sold comps ticked and active ones marked for sale.
- •A check that the evidence agrees with the range: each comp shows as a dot on the price range while you edit, and one that falls outside it is flagged before the seller sees it.
- •What the seller takes home: add the net sheet and the seller can drag a price slider and see the proceeds after commission, the tax on it and their mortgage at each price.
- •What happens after you send it: you see when the seller opened the page, where they left the slider and whether they tapped Yes or I have questions, which is your agenda for the next call.
Listing presentations are on Pro and Studio, and during the 14-day Pro trial.
Robert Cekan is a REALTOR® in Hamilton, Ontario, the publisher of Urbanicity Hamilton, and the founder of Listing Launchpad. The playbooks here come from running real listings.