Most agents have come across listings that surely must have errors in them, because from what’s shown, the price seems way off. Then it becomes a matter of figuring out what has not been shown. And, unfortunately, once the quasi-mystery is solved, the ask is suddenly correct.
They are the comp “flaws,” singular aspects of a property that make prospective buyers go “ugh.” Perhaps they will come around…often they will not. And the flaws do not usually have to be included in a listing agent’s online presentation of a home unless they are an integral part of it.
There can be subtle comp flaws and major ones. Location is often a major one. Two homes in the same neighborhood can be practically identical. But one may be at the end of a quiet cul-de-sac, while the other has the highway across the street. The comp for the second one will not point that out.
Two condo units in the same building may have the same precise layout and square footage, and be on the same floor. But one has windows with city views, while the other has windows across from walls. Again, not in the listing, but the prices will surely be very different, or should.
Working in the Philadelphia, Pennsylvania, market, Thistle says that “in cities like this one, there’s beauty in the blend of real estate styles. But different property values in the same or a similar location can be confusing.”
She notes that some traits that adversely affect an urban home’s value include:
- Trinity (or turned) stairs
- Lower-level kitchen or bedrooms
- Narrow or shallow lot size
- Just outside a top school catchment (one side of the street, in the catchment, will value higher than a house outside of it, even if on the same block)
- High-floor condo in a walk-up building
- Tenant occupied, if condition is diminished
- Pet or smoker odor
For suburban homes, the comp flaws are different. As noted, being located next to a highway or major thoroughfare is a big negative, as traffic noise and pollution are constant, even at night.
Other flaws include:
- Living near a waste-management facility, which has heavy truck traffic, potential health risks and a likelihood of bad smells
- Being close to police or fire stations, with sirens anytime a possibility
- An above-ground pool, which potential homebuyers would want removed and the ground resodded
- Too close to a school, due to constant activities, buses and noise
Thus, the old real estate saw of “location, location, location” is as true as ever, especially when putting together comps for clients. A buyer agent’s ability to know all aspects of the properties they show clients is one of their major strengths, especially going forward in 2024 and beyond with their commission likely predetermined.
“When we need to cast a wide net and go ‘outside the box’ to draw comparisons where things are dicier or there are fewer or more unique sales, a seasoned agent needs to know where a very important line is drawn,” says Usdan. “A veteran agent has the advantage, since even if they haven’t seen a property this time around, they would have seen it last time, or the time before that, and can gauge what improvements have (or haven’t) been made since.”
Thistle has seen how home appraisers hired by companies considering mortgages for properties go about their business. She stresses that there are major differences when it comes to an appraiser who judges suburban homes and one who often has to compare homes in the same building or on the same block.
“I have respect for an appraisal where the correct comps were selected and adjusted properly,” she says. “With local lenders using a local pool of appraisers, appraisals are generally reliable and fair. Often, out-of-area appraisers use comps in the same zip code that could be two neighborhoods away from the subject property. These are not accurate or reliable.”
Working within a city has its own challenges as well regarding appraisals and the sometimes subtle but powerful forces that come into play.
“Appraisals here have about the same shelf life as fruit,” admits Thistle. “The market changes quickly as a consequence of inventory levels, rates and even political factors like an election. Also, lenders have criteria for how long an appraisal is still good. For a longer closing, like new construction, there may be two appraisals done so that the last one matches the current market.”
