Pricing Rules

Pricing a home can be tricky and can cost a home seller thousands of dollars if not established correctly. Below are some strategies to help you get started to help you understand the methods a professional may use to price your home correctly.From searching for good comparable properties to using a specific pricing strategy, there are a variety of ways to find the market value of your home. Because Texas is non-disclosure state, accurate sales prices of sold homes can be difficult to come by.

Most homeowners try to keep up with the activity in their neighborhood, but sometimes their neighbors that previously sold their homes will give a less-than-truthful answer when asked while they are exiting the neighborhood – possibly to protect their financial privacy, or maybe because they took a lower value than expected and they don’t want their former neighbors angry with them!


Getting Started: Home Pricing Strategies

Below is an easy-to-follow guide to help you find solid comparable homes. However, since you probably do not have access to the local MLS and all of its sold data, it is important that if you want to truly get a good accurate value on your home you should contact a local real estate professional who knows your area, like Rob.

1. Find Nearby Sold Properties

First, you want to find sold properties within the neighborhood of the subject property. Ideally, if there are 12-16 homes that have sold in the last 12 months this is a fine start. Some of these homes will be filtered out once you narrow down similarities and certain features. However, if you are in a more rural area with little turnover – or maybe a unique property surrounded by other homes that are not the same – like a luxury townhome surrounded by single-family homes, or recent construction surrounded by older homes – you may need to expand your search a little more in order to find other comparable properties.

2. Sold in the Last 3-6 Months

Now that you have pulled in all the sold data within a close distance of your home, you will want
to narrow it down to homes that have sold within the last 3-6 months. Since the real estate market is constantly fluctuating, you probably won’t get a solid comparison to the current market value beyond that timeline. Again, if you live in an area with few comparable sales, you might have to go back 9 months or even a year, although this is frowned on by appraisers.

3. Similar Style of Home

Your list should be getting smaller and smaller as you start to narrow it down. If you look closely at each property, you will notice that there are different styles of homes. If you are wanting to find the true market value of your home, it’s important that you only compare to properties similar to yours. Cost of construction on a 2,000 square foot home is very different from a traditional 2-story home compared to a one-story home which is usually on a larger lot.

4. Look at Age of Home

Compare your home to other properties that are within the same age. This doesn’t have to be the exact age but within a 10-year span (5 years on either side) would be key. Of course, the condition can play a big role in age as well – a 40-year-old property that was recently updated is not comparable to one that has not been updated and is completely original.

5. Size of Comparable Homes

The size of the comparable homes you use is very important when looking to zero in on an accurate price for your home. Compare your property to other homes that are roughly within an 6-10% difference in square footage. If a home is less than roughly 2800 square feet, stay on the lower side of that percentage – for example, if your house is 2500 square feet, filter out homes that don't fall in between 2350 – 2650 square feet. Above 3000 square feet, you can widen the percentage a bit, but probably not more than a total of roughly 400 square feet to either side even if the property is 4500 square feet or more unless there is just nothing else to use.

Bedrooms – Are the homes similar in size and have the same number of bedrooms?
Bathrooms – How many bathrooms or half baths compared to the subject property?
Construction – Look to see how the square footage is distributed – one story or two?
Garage – Do the comparable homes have an attached or detached garage?

Quick tip: It’s critical that you concentrate on finding the best group of comparable homes, possible to help you price your property correctly.

Finding the Market Value of Your Home

Now that you have narrowed your search down to a workable number of properties, you need to determine a pricing strategy. There are multiple ways to do this. Below are three ways to help you formulate this. Some professionals will even use a hybrid approach by using the Qualitative analysis added with the Quantitative analysis.

Ranking Strategy
Arrange sales from lowest to highest price and determine where your property falls to find the approximate market value. This can be a similar approach to the qualitative analysis below. Look at each comparable property, and using your judgment determine which house has superior features that are important to buyers in your market. Then decide where your home falls within the list.

Quantitative Strategy

A more precise measurement is the Quantitative analysis. This strategy determines the market value by making mathematical adjustments by using a dollar amount or percentage for different features and upgrades. This is the more advanced (and accurate) approach when pricing a home.


This is a do-it-yourself approach to help you get a general idea of the market value of your home. When trying to price your home on your own, it can be very easy to make a mistake resulting in an inaccurate valuation – which can mean lost equity of thousands of dollars, or pricing your home too high so that it never gets sold, resulting in higher holding costs, frustration and either a delayed or even abandoned move to a new home that better fits your needs. It is important that if you want to truly get a good accurate value on your home in today’s market you should contact a local Realtor that you know, like and trust. Rob is always happy to provide you a free, no obligation CMA (comparative market analysis) report or he can recommend a local appraiser as well – which is not free, but can be more thorough and precise.