Experienced agents that have gathered the comparable statistical data reports still rely on their instincts to guide them. Active agents are familiar with many properties in the area. They are engaged in the market and have command of information and experience. These agents can explain why one house sold for more than another house.
However, that does not mean the seller will welcome the information or is interested in facts that do not support their wishes. That happens. It is tricky. But, it is a bridge every agent is forced to cross at some point in their career. Often the key to success is confidence in the knowledge of the marketplace and confidence in the substantive data used to determined market value.
An important consideration that can serve as a useful reference point is square foot analysis. In some real estate offices, this is required information. Experienced agents track selling prices and track the square footage of homes in certain price ranges. Care is needed in these comparisons because square footage selling prices may include amenities and differences in lot sizes that can affect market value. However, square footage analysis works and is a useful guide in crosschecking values.
Agents should always know the square footage cost of building a new home. That is important data and it affects the market value of every listing and home in the area.
Additionally, when the home is under contract, the appraiser will use square footage comparables. With changes in today’s approved appraisal practices, this is becoming mandatory. The listing agent must be able to justify pricing on homes that sell at a higher square footage rate than comparable properties.
To apply a square footage comparison, the agent must know the value of certain amenities, the desirability of those amenities as well as the impact of the lot on the square footage average. Certainly a two-acre lot has added value to a comparable home on a half-acre lot. The question is how much added value. At first, homeowners may not want to listen to square footage comparisons. The fact is that they are difficult to ignore. Properly documented, the square footage approach to substantiating market value is extremely effective.