The question I seem to get from my clients is, “What is the best comparative (comp) to this property?”  It comes from both buyers and sellers.  The buyers are asking about the home they may potentially buy, and they want to know the price of the same kind of home (a comp) that has sold in the last six months.  This will give them valuable information about what to offer and ultimately pay for the home they are planning to pursue.  The sellers are asking about the house in which they live – this will give them a reasonable expectation about the fair market value for their house.  The problem is that in Weston – and in many of the other surrounding towns – there is not usually such a thing as a true comp….

But before we get to that, let’s look at the comparative process and how to value your home.  The first step is to identify the solds in the approximate price range of your home.  (If you’re not sure of the approximate price range, use your assessed value as a starting point.)  Then find the home(s) most similar to yours and compare them based on the style of the house (Colonial, Cape, Contemporary,  Antique), neighborhood/location, condition, living area of home, size and usability of land – those are the big differentiators. As you go through this process, you’ll see that it’s extremely difficult to have two homes or more match up similarly to yours based on these criteria.  

In Weston, for example, most of the properties weren’t built through a residential development process and the majority of them were built between the 1950s and 1970s as Weston was growing, and so the homes and neighborhoods aren’t “cookie cutter,” for lack of a better word.  In fact, they are the complete opposite.  As my father said when he first came to Weston, “the homes here are very eclectic.”  In other words, there isn’t uniformity within a neighborhood – or even the town in general, for that matter. And so even your next door neighbor’s home may not be a comp – in fact, in Weston, 99% of the time it won’t be.

Let’s use two different properties to further illustrate my point – Property A and Property B, which are next door to one another.  Property A has a level lot with nice-sized, proportional front and back yards, while Property B has a similar front yard, but the back yard drops off to such a degree that it is basically not usable.  And so the location would be considered the same, but the land usability is completely different.  To complicate matters (for the sake of our comparative analysis), Property A’s lot size is only .5 acres, and Property B’s lot size is 2.5 acres.  The differences get even greater given that Property A is a Contemporary and Property B is a Colonial.  Just right there, two houses side by side are completely different with regard to the land and the style of home.  And so the big question becomes how do you value both houses?

From a land perspective, I think most of us would put a higher value on Property A because of the land usability.  But how much more would we value that?  Is Property A $5,000 more valuable than Property B or $50,000 more valuable.  And to further confuse matters, what if there was a buyer who valued his privacy more than anything and was willing to pay more for a property that had more than 2 acres and didn’t care a hoot about the land’s usability.  If this were the case, that buyer might pay $50,000 more for Property B.  

In terms of the style of home, most of us – at least in New England – would prefer Property B’s Colonial to Property A’s Contemporary.  But again, how would you quantify that difference?  Does that make Property B $5,000 or $10,000 more valuable?  And to buyers who prefer contemporaries, they would put more of a value on Property A’s style of home despite the fact that Property B’s style of home is not as appealing and doesn’t therefore sell as well in New England.

So you can see how complicated the comparative process can be.  I contend that these differences can’t necessarily be quantified – not to mention that what a buyer is willing to pay for a particular home given his or her preferences is purely subjective and can negate our beliefs regarding appeal and saleability of a home.  Appraisers would disagree as they are in the business of adding or subtracting a finite value based on a certain home’s differences to a sold property.  But in practice, as illustrated in the analysis of Property A and Property B, these differences can’t be quantified and come down to a matter of preference and subjectivity on the part of the buyers.  

What are your thoughts?  Have you ever seen a perfect comp to your house?  And what do you think of the comparative home/market analysis process? I can’t wait to hear….