How to Cope with a Surprise Listing or Sales Price in Your Neighborhood

Factors that Affect House Prices

Don’t think that it automatically dooms the price you hope you’ll receive some day


What happens when a neighbor or homeowner in your area puts their house up for sale at a price that’s less than you expected? You probably get nervous that it will affect the overall comps in your town, village or city. Even worse, the house might sell for less than you had hoped and then become a real factor—and permanently. And even if you aren’t listing and selling your home immediately, you might, and then the problem escalates to: “What if I don’t get my anticipated sales offer because of my neighbor’s lower price?”


Factors that Affect House PricesWhile the two houses may not be exactly the same, if they are fairly similar, you are right to feel some anxiety. Comparison values—referred to as “comps”—are important as means for determining a listing or sales price. However, the truth is that they represent only one factor in setting a price, albeit an important one. Appraisers and real estate sales people and brokers look at all similar houses that were listed or sold in the same neighborhood over the last three months, not just one. Also know that “same neighborhood” usually refers to houses within a close geographic area of about a half mile or so.



You also should know that many other criteria or variables come into play. Broker Anthony Marguleas, owner of The Marguleas Team at Amalfi Estates in the Los Angeles area of California, says seasoned real estate salespersons or brokers also find the other factors that influence a price being set lower or higher than yours, and will put your listing in the proper context. Among the other variables are:


Factors that Affect House PricesCondition. You may have remodeled, which is a huge plus with many buyers today who don’t want to spend time working on upgrading kitchens, bathrooms, yards.





Lot Size. You may have more land or land that’s more level, with a better view and not on a corner, which some buyers don’t like for its lack of privacy. There also may be many tall trees on the neighbor’s site, which may be beautiful with leaves come spring, summer and fall, though they also may signal lots of maintenance to trim dying limbs or remove dead trees as they age or because of storms.


Home size. Square footage is a big plus especially if it’s usable, which means in rooms rather than in hallways, attics or basements since some buyers may not like trekking up or down to a third level and can’t find any way to use that big long but narrow hall.




Floor plan. If rooms are open to one another that is another huge asset today. Many buyers now favor a kitchen adjacent or open to a family room and with a powder room nearby or bedrooms each with their own bathroom for what’s called an en suite arrangement.


Number of bedrooms and bathrooms. A “healthy” number that works for a family today—three or four bedrooms and, perhaps, 2 1/2 bathrooms is a good number that may give you a higher price while the neighbor’s two bedrooms with the third turned into a walk-in closet won’t be considered as universally appealing and require that special buyer, hence, the reason for their lower listing or sales price.


Amenities. These can be a big plus but also sometimes a detriment depending on what they are and where the house is located geographically. For example, a pool that’s updated and in a warm climate can become a good sales feature. Now, if it’s dated or small it could become a negative since it would require funds to make it less of an eyesore. Same goes for a pool in the Northeast where it’s useable fewer months of the year. It may appeal to some lookers but not all who would rather have the land for a screened-in porch that could be used for more months out of the year.


Supply and demand. How much inventory there is will affect the price, and if little and the area is gaining in popularity, the price is likely to go higher, sometimes ridiculously so. On the other hand, if there’s lots of other homes on the market and buyers are cautious given the economy or some other extenuating factor the price might drop.


Online buzz. So many buyers today first search for a house online. If staged properly and with great photos and a tempting description that could make it appear to be the most desirable house in the world and help it warrant a higher listing price.





Then there are also all sorts of intangibles that don’t have to do directly with the house but will affect its listing or sales price. A big one, for example, is how motivated the seller is. If the owner is looking to get out of Dodge quickly, so to speak, perhaps, because of a job relocation, he may not be looking to get the highest price and leave it on the market for months, especially if it’s a slow market. Also, if the owner has lived there a long time and has a healthy nest egg, she may not need to get every last penny from the sale and may see value in getting a good enough price from a lower listing number. Of course, sometimes a lower than expected listing price may lead to competitive bids and yield a great final sales price!


A second intangible could be that the listing salesperson is an out-of-the-area agent who may not know the market as well as a local one and may not have adequately done her comp pricing research.


Third, there could have been some unusual disclosures with the home such as a murder that adds the intangible of bad karma for a period or mold that hasn’t been completely eliminated but which is in the process of being remediated.




So how should your own salesperson or broker handle a lower listing or sales price if you’re selling soon? Marguleas suggests a first step is for the person to call the neighbor’s agent and ask why it was priced at XYZ dollars when they thought it might be 20 percent higher. Gene Hacker, a broker with Buyer’s Choice Realty in Brea, Calif., who also flips houses, thinks that’s an important step. And “if a reason can’t be found, then you have to explain that someone got a really good deal,” he says.


Ed Reynolds, an associate broker with Atlas Real Estate Group in Denver, Colo., also suggests a homeowner and their salesperson go to any and all open houses in the neighborhood to understand firsthand what the differences are between the house listed and their own. Seeing room sizes, layout, and condition in person is worth more than any virtual tour and MLS description. And still another idea is to go through public records for houses sold and look for any sales that weren’t in the area MLS for whatever reason and take them into account when coming up with a listing price.


When all is said and done, the good news, says William Flood, a real estate investor analyst, with, who’s based in Columbus, Ohio, is that one individual sale isn’t likely to affect the market and your home. “It’s an isolated incident that doesn’t really tell you much of anything about what nearby houses might actually sell for,” he says. But he does add a caveat. “Of course, if a neighbor’s lowered price represents a trend in your community, that’s a different matter entirely.” In either case, he suggests having an objective battery of numbers and data to help you determine and explain what your own property is worth, such as all the upgrades you made in the kitchen and all the new hardwood floors you installed.

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