Real Estate Pricing Guide Free from Jacksonville FL Real Estate Agents

What Is That Home
REALLY Worth?

USE THIS FAST 3‐STEP FORMULA!

[TOP SECRET PRICING GUIDE]

Top Secret Pricing Guide | © 2013 Chad & Sandy Neumann
2

Congratulations! You’re about to learn our secret strategy for calculating the current
market value of a Jacksonville home so you can price your property bid (or your listing)
effectively!

There are no guarantees, but we certainly hope you find this information helpful and
that you will use it as a spring‐board for a more serious consultation with a professional
advisor or local real estate agent. By the end of this exercise you’ll be able to enter any
Jacksonville real estate decision armed with real data and a viable price range for the
property you are evaluating.

We’ll call that property the “subject” property.

3

Step 1: Find Three Sales

To get the most accurate value, you’ve got to find solid data to measure your subject
home against.  After all, your results will only be as good as the information you enter
into your formula. You are looking for at least three recent sales of homes that are
extremely similar to the subject. These three sales are often referred to as “comps,” or
recent comparable sales. (I used the phrase “extremely similar” in my previous
statement because it is a common tendency of home owners to unknowingly insert
personal bias into their home value equation. This will yield poor results.) To be certain
that you are using appropriate and objective data, ask a third party to review your
comps. You can find recent sales from your county’s property appraiser web site, your
neighbors, or the newspaper. However, the best source of comps is a local real estate
agent who will gladly provide this service free of charge.

When scouring recent sales, here are the specific criteria you are looking for:

 Sale date 30‐90 days old
 Same size
 Same Age
 Same location

Sale date 30‐90 days old.

The market is changing so fast, especially in the cities hit hardest a few years back. The
markets that fell fast and dramatically tend to come back somewhat faster and more
dramatically than other markets. So keep a close eye on your market and how it
compares against national trends. Ideally you should look for homes that sold in the last
30 days ideally, but allow sales 60‐90 days old if absolutely necessary. (Some
neighborhoods may have had 30 sales in the last three months, while others haven’t
seen a sale in over a year. You shouldn’t rule out a sale in your immediate community
solely because of the date unless it is more than one year old.

Same Size.

You can use square footage as a guide. Most professional broker price opinions will set a
range of 200 square feet smaller to 200 square feet larger than the subject property. For
example, if your home is 1,600 square feet we’d include homes ranging from 1,400‐
1,800 square feet. You can also try to find comps that have the same style if available,

4

such as two‐story or ranch. Of course you’ll need the same number of bedrooms and
bathrooms preferably. Buyers give great value to a four‐bedroom home over a three‐
bedroom home of the same square footage. Also keep in mind that your “office” is not
considered a bedroom if it does not have a closet (or is not really a separate room with a
door). If you have added a bedroom to your home, make sure it is permitted properly
and recorded with the county property appraiser’s office.

One caveat: square footage becomes irrelevant if yours is the largest house on the
block. It is possible (and common) for one home to be overbuilt for its street or
neighborhood. A good reason why price per square foot is not always the best way to
calculate a home’s price. You could derive a price that is far higher than any other home
in your neighborhood, one that buyers are not willing to pay for your community. Hint:
for best chances of selling, try not to be the highest priced home on the market. Price
your home in a position that makes it look like a bargain but still maintains the high end
of its value. (It’s an art, remember?)

Same Age.

While there is a little flexibility here, especially with older homes, the standard rule of
thumb is to use a range similar to the one we used for square footage. Typically we’d
select a range of homes 10‐20 years older through 10‐20 years newer. If your home was
built in 1980, I’d probably review sales of comparable homes with year built from 1970‐
1990. If you cannot find enough relevant data you can expand the range to include
homes that make the most sense.

Same location.

This is the most relevant factor. Always start inside your immediate neighborhood first,
only working your way out to a half‐mile radius if you cannot find a comparable sale in
your community within the past year. There is great discrepancy from street to street,
even within the same neighborhood. For example, in large newer communities it’s
common to find three or four different home builders of varying quality. Also, one home
might be identical in structure to yours but located on the busiest street in the
subdivision while yours is nestled on a cul‐de‐sac at the back of the community. And
homes built directly on a golf course or lake, for example, are considered premium lots
and usually sell for a slightly higher price.

5

If you absolutely cannot find a recent comparable sale in your community, it’s okay to
venture out but be very careful to select a community of similar size, built around the
same time, and with the same amenities. Similarity of subdivision is more important
than distance from your home, but make sure it’s at least in the same part of town.
Again, good judgment will serve you well.

Now, write down the address and the sales price for each of the homes you selected as
comps.

Congratulations, research is done!

6

Step 2: Record Assessed Values

Now that you’ve got at least three good comparable home sales in hand, it’s time to
start the formula! We will use a ratio of sale price to assessed value to derive a score for
each of your comps.

Grab your calculator, and go online to your county’s property appraiser web site to
search property records by address. Find and record the “assessed value” for each of
your comp sales and for your own home. Make sure you use the value for the current
year, and the value before exemptions (not to be confused with taxable value.)

Now plug your data into this formula to derive a “score” for each home.

Formula:

Sale Price
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐    =   X     (where, X = the score)
Assessed Value

Example:

$263,000
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐    =   1.6
$158,000

Repeat this step until you have a score for each of your comps. You should get similar
scores for each home. If you find a huge discrepancy in scores, you probably need to go
back to step one and find better comps. If all comps are close in range except for one
that is really high or really low, just eliminate the extreme score altogether and don’t
use that comp in your calculations. Many times a really high or really low score
represents a home that sold under rare circumstance (like a foreclosed home with a
termite problem or a high sale that had an unusual feature or historic relevance.) If
you’ve collected several comps, feel free to eliminate the highest and the lowest score
as long as you have at least three solid comps to work with.

7

‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

-- The Art of Pricing –

HINT: This formula comes in handy for buyers who are trying to calculate a winning bid.
Apply a similar ratio, but this time divide list prices by sales prices to generate an
average score that tells how much ABOVE the list price you should reasonably bid in a
competing offers situation. Take it one step further: compare winning bid scores against
assessed value scores to make sure that your winning bid does not exceed what the
home is reasonably worth.

‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

A score above the number one (as seen here in the example) indicated that a property
sold “above” its assessed value. In this case, it’s 166%. In other areas, you’ll see homes
selling for a portion of their assessed value, such as 50% or 80%. Some counties assess
their homes low so that every sale appears above assessed value. Other counties may
give high assessments but sale prices will appear as 50% of their assessed value. Scores
don’t just vary by county, but also sometimes by area and neighborhood so make sure
you know what’s common for yours. Whether the number is above or below 1 is not
important. It’s whether you are evaluating your home on a level playing field that’s
important.

Test Your Agent

If you receive a market analysis from a realtor that is significantly above the assessed
value of your home in an area where homes typically sell at 75% of their value, you may
end up wasting critical time and money marketing an overpriced home. Later, after you
reduce your price and buyers start looking at your home, they’ll perceive the long time
on market as a drawback. They often assume that there is some defect that kept your
home from selling quickly. Or, at best, they will assume that you can’t afford to sell and
have no room to negotiate. Believe it or not, most buyers do not want to insult sellers
and would rather not make an offer on an overpriced home, even if it’s one they really
like. So don’t let a sweet‐talking agent convince you of an unrealistic list price. Estimate
your home’s value on your own, then discuss a well‐planned pricing strategy with an
agent who will give you an honest evaluation.

8

Select A Score

Next, you can either take the average of all the scores or you can make your own
decision about what makes sense for one overall score that best represents all property
values. It should be easy to pick a score that is reasonably consistent with your data.

I like to choose both one overall score AND a range of low score to high score.

For example, 1.6 is the average of all my scores that range from 1.55‐1.65.

9

Step 3: Apply Score To Subject.

Take that number you just derived (1.6 in our example), and multiply it by your subject
home’s assessed value. For example, if your subject is assessed at $170,000 then your
resulting price would be 1.6 x $170,000 = $272,000!

Again, feel free to calculate a range using the high and low scores, or by selecting a
percentage above and below this score.

1.55 to 1.65 yields a range of $263,500 to $280,500

A range that spans $20,000 is ideal. It is typical in our area based on the list‐to‐sales
price averages for our market, and the negotiation leeway that buyers expect. Except in
the case of competing offers, it is not uncommon for sellers to come down $10,000‐
15,000 on an accurately‐priced listing. However, our local market has experienced an
extremely low inventory that has resulted in bidding wars and is driving most sales
above list price. Just another reason it’s critical to know how to calculate home values.

‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

-- The Art of Pricing –

HINT: Buyers who win bids on the first try often feel like they overbid. Make sure you
add just enough to your list price to allow negotiations without over pricing.

‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

One Last Look…

Finally, go back and evaluate your results objectively. Common sense and good
judgment trump everything else. So if your sales comps did not account for your heated
in‐ground swimming pool, then perhaps you could reasonably add $10,000 to your final
value depending on current trends. Remember, it’s not what you paid for the pool (or
your new kitchen, or other upgrades) but rather what monetary value the current
marketplace assigns to it.

1
0

Want To Get Even MORE For Your Money?
(It’s The Pricing Guide on Steroids)
Did your results surprise you? Final value will only be as good as the numbers you put
into the formula. To get the best results gather the most accurate, recent sales. What if
there hasn’t been a comparable sale in your immediate neighborhood for quite some
time? Don’t forget about pending sales that could drastically change your valuation.

In other words, there are quick and easy ways to evaluate home prices (and that’s a
good start!) that produce average, ball‐park figures.

That’s not our style. Not what we do.

We have an advanced way we go about “valuing” homes that produces extraordinarily
accurate results. Our system can’t be quantified into a hard and fast formula, per se,
because it’s built on understanding of intangibles: neighborhood dynamics, differing
home styles and conditions, local builder quality, owner modifications (good and bad),
quiet streets and busy ones, seller history, and social situations. Not to negate formulas
and hard data, but there is something to be said for “having an ear to the ground.”

We’ve laid out the best places to own real estate in Jacksonville, FL on our web site at:

http://houses‐that‐rock.com

Best,
Chad & Sandy Neumann
(904) 219‐7539

Real Estate Pricing Guide Free from Jacksonville FL Real Estate Agents

Recommended

Recommended

More Related Content

Recently uploaded

Recently uploaded (20)

Featured

Featured (20)

Real Estate Pricing Guide Free from Jacksonville FL Real Estate Agents