Overview
A list price is a decision, and it should rest on evidence you can follow. That evidence is mostly comparable sales, often called comps: recent sales of homes similar to yours, near yours. This page explains how comps are chosen, how they are adjusted and how to read a pricing review so that you understand its reasoning rather than accept a single figure on faith.
Pricing a distinctive home is more a matter of judgment than arithmetic. A restored Craftsman, a Spanish Colonial Revival home on a deep lot or a mid-century house by a known architect may have few true peers. The review then depends on how carefully the closest sales are chosen and how candidly their differences are explained.
This page contains no prices, medians or forecasts. Market figures for your home come from the multiple listing service at the time of your review, and they change.
What to have ready
Your own records sharpen a review considerably.
Ticks are for your own use on this device.
What a comparable sale is
A comparable sale is a closed sale of a home that a buyer shopping for yours might also have considered. Good comps tend to share:
- Location. The same neighborhood or a very similar one, with similar streets and surroundings
- Type. Single-family home compared with single-family home, condominium with condominium
- Size. Similar interior living area and lot size
- Layout. Similar bedroom and bathroom count and a similar number of levels
- Age and condition. Similar era of construction and a similar level of updating
- Timing. Sold recently enough to reflect current conditions
No comp matches perfectly. The work lies in choosing the closest ones and accounting for the differences.
Three kinds of evidence, and a fourth
A pricing review usually looks at three groups of homes, and each tells you something different.
Closed sales. These show what buyers actually paid. They are the firmest evidence, but they describe the past.
Pending sales. These are under contract but not yet closed. They suggest where the market is now, though the final price is usually not public until closing.
Active listings. These are your competition. They show what buyers can choose from today, not what buyers will pay.
Expired and withdrawn listings. A home that did not sell at a given price is useful information, particularly at the upper end of an area, where a single unsold listing can say a great deal.
How it works
How adjustments work
Because no two homes are identical, a review adjusts each comp for its differences from your home. If a comp has a feature your home lacks, the comp is adjusted down; if your home has a feature the comp lacks, the comp is adjusted up.
Common adjustment points:
- Living area and lot size
- Bedroom and bathroom count
- Condition and level of updating
- Views, privacy and outdoor space
- Garage, parking and accessory structures
- Street position and nearby traffic
Adjustments are informed judgment, not formulas. Ask how each one was reached and how much weight it carries.
A worked sequence
A careful review usually proceeds in this order:
- Define the home. Confirm its living area, lot, layout, condition and distinguishing features, ideally after walking it in person.
- Search widely, then narrow. Gather recent sales in the area, then discard those that a buyer for your home would not have considered.
- Rank the remainder. Identify the three to six closest sales and explain why each was kept.
- Adjust. Account for each meaningful difference, with a short reason for each.
- Reconcile. Weigh the adjusted comps, giving more weight to the closest, and arrive at a range.
- Test against the present. Compare that range with pending sales and active listings to see whether the market has moved.
- Discuss strategy. Consider how your goals, timing and the competition bear on where in the range to list.
Planning tool
Comparable Sales Worksheet
Follow a pricing review's reasoning with figures you bring yourself. Adjustments are informed judgment, not formulas, so the worksheet never suggests one.
Your home
Such as “Comp A”. No address needed.
Adjustments
Add a row for each meaningful difference, with the amount you or your advisor entered and a short reason.
- Price per square foot
- Add sale price and living area to calculate
- Adjustments entered
- None counted yet
- Adjusted figure
- Add sale price and living area to calculate
Up to 6 comparable sales.
Range of your worksheet figures
Add sale price and living area for at least one comp to see the range of your figures.
A worksheet for following a pricing review, for discussion. It is not an appraisal, a valuation or a list-price recommendation. Price per square foot is one lens and does not capture what makes a home distinctive.
Your entries stay in this browser on this device. Nothing is sent to us.
A note on architectural and high-equity homes
Distinctive homes call for a few additional steps.
- Widen the search with care. If few close matches exist nearby, the review may reach further back in time or further out in area. Each step away from your home calls for a clear explanation.
- Separate authenticity from age. An original, well-maintained period interior and a dated remodel are different things, even if both are old. Ask how the review treats each.
- Account for grounds. Mature gardens, garden walls, a guest house or a pool can matter to buyers, but their effect varies. Ask whether a comp's grounds were truly similar.
- Recognize thin evidence. At the upper end of a market, there may be only a handful of relevant sales. A wider range, honestly explained, is more useful than a precise figure that implies false certainty.
- Note designations. If the home is a designated landmark or in a historic district, mention it. Ask the city's planning office what that designation means for future work; buyers will ask too.
In practice. For a home with few peers, the conversation often matters more than the spreadsheet. Expect Sidney to explain why each comp was kept and what it does and does not tell you.
For a home with few peers, the conversation often matters more than the spreadsheet.
Reading a review
Reading a pricing review
When Sidney prepares a pricing review, it should be something you can check line by line. Questions worth asking:
Ticks are for your own use on this device.
What comps do not capture
Some things rarely show up in sale records but still matter to buyers:
- The quality of light and the feel of the rooms
- Recent work that is not visible in listing photos
- Noise, privacy and how the home sits on its lot
- Craftsmanship and original materials
- Unusual architecture that few recent sales share
These are part of the conversation, and they are reasons to walk the home in person rather than price it from a screen.
Online estimates
Automated estimates use public records and statistical models. They can be a starting point, but they cannot see inside your home and may not know about recent improvements or condition issues. They are least reliable for distinctive homes. Treat any single online figure as a question, not an answer.
From a range to a list price
A pricing review produces a range, not a promise. Choosing a list price within or near that range is your decision, made with Sidney's input on the comps, the current competition and your goals and timing.
If this, then that:
- If your timing is firm, then weigh where in the range the home is likely to draw the most attention from buyers soon.
- If your timing is flexible, then you may choose a different point in the range, accepting the trade-off of a potentially longer listing.
- If the evidence is thin, then plan in advance how you will read early feedback from showings and when you will revisit the price.
You can begin with a home valuation request, or read more in the Journal note How much is my Pasadena home worth?. For an overview of the wider area, see the San Gabriel Valley neighborhood page.
Questions
Common pitfalls
Anchoring on one sale.
A single high or low sale rarely represents the market.
Comparing list prices instead of sale prices.
Active listings show asking prices, not results.
Ignoring condition.
Two homes of the same size can differ greatly in level of updating.
Overstating improvements.
Buyers weigh improvements against what comparable homes offered.
Pricing from a screen.
A review without a visit misses what makes the home distinctive.
Questions to bring to your advisers
Your CPA
How do my improvements affect my basis? IRS Publication 523 explains how gain on a main home is figured, and a CPA can apply it to your facts.
A real estate attorney or CPA
If I need a formal appraisal for an estate, trust or tax purpose, who should prepare it, and what date should it reflect?
Frequently asked questions
Is a pricing review the same as an appraisal?
No. A pricing review, sometimes called a comparative market analysis, is an agent's informed opinion of a likely price range, based on comparable sales and current listings. An appraisal is prepared by an appraiser, often for a buyer's lender, under its own standards. The two can differ. If you need an appraisal for another purpose, such as an estate or a tax question, ask your attorney or CPA.
How far back should comparable sales go?
As recent as possible while still finding homes that are truly similar. In an active area with many similar homes, recent months may be enough. For a distinctive home with few close matches, the review may need to reach further back or further out, and adjust more. Ask Sidney why each date range was chosen; there is no single rule that fits every home.
Why do online estimates differ from a pricing review?
Automated estimates rely on public records and models that cannot see inside the home. They may miss recent improvements, condition issues, layout or the feel of a particular street. A pricing review starts from the same kind of sales data but adds a visit to the home and judgment about which sales are truly comparable. Treat any single online figure as a starting point for questions.
Can my improvements raise the price?
They can matter to buyers, but there is no fixed amount any improvement adds. A review weighs your improvements against what comparable homes offered when they sold. Keep receipts and permits; they help in the pricing conversation and in your disclosures. For tax questions about improvements and basis, IRS Publication 523 is a starting point to discuss with a CPA.
How is an architectural or historic home priced?
With the same method, applied more carefully. The review looks for sales of homes a buyer for yours would also have considered, which may mean reaching further in time or area, and explains each step. Original materials, craftsmanship and documented history are part of the conversation, though no fixed amount attaches to any of them.
Why is the range wider for my home than for others?
A wider range usually reflects thinner evidence. When few recent sales resemble a home closely, an honest review shows more uncertainty rather than implying a precision the data cannot support. Ask Sidney which comps carry the most weight and what kind of buyer feedback would help narrow the range once the home is on the market.
What happens if the market changes during my listing?
Pricing is revisited, not fixed. New sales, new competition and feedback from showings all inform whether the price still fits. Agree with Sidney at the outset on when you will review the evidence together, so any adjustment is a considered decision rather than a reaction. The final choice of price always rests with you.
Official sources
This page describes general pricing practice and makes no legal, tax or regulatory statements apart from a pointer to IRS Publication 523: https://www.irs.gov/publications/p523
Want a pricing review you can check line by line? Use the "Ask Sidney about your home" card on this page to send a private note.
When you would like a second set of eyes
If you would like Sidney to walk you through the sales that bear on your home, and why each one was kept, a pricing conversation is the place to start.
Sidney Manzo, licensed real estate agent, in real estate since 1990. CA DRE #01108914. RE/MAX Dream Properties (ASLG Inc), CA DRE #02142193.
