Resources for purchase price when there are no comps?

Question

Hi there!

I'm looking at purchasing a property for a primary residence and I can't seem to find any comps. The house is in a very low turn-around neighborhood, where the most recent sales roughly two years ago. These sales were around 300k, and the asking price of the house is now 425k. There is one house for sale on the same road at 680k, but it's been for sale for quite a while, is larger, newer and doesn't need updating. I think they might be overpriced (the house sat on the market for 7 months before they pulled it). Not looking to get a stellar deal, I just honestly don't know what to offer as a fair price! The appraisal will certainly let me know if I'm way off, but I want to make sure I get a fair deal and they get a fair deal (..for the condition of the home).

Does anyone have any advice on coming up with a fair purchase price when comps can't be found? I've checked the Zestimate, local sales within the county, and looked at all the similar houses in the area to no real avail. If anyone wants to take a stab at pricing it I'll be happy to shoot you the address in a private message. :)

Tyia in advance for advice!

Jesse L. Weaver · Answer

It sounds like you need a good agent with local market knowledge. If you are struggling, reach out to a professional who does it for a living!

Eliott Elias · Answer

Look at tax value and stretch your search to 320 days sold.

Chris Mason · Answer

Expanding the search criteria is one thing you could do. Draw a bigger circle around the property in question. But now you're out of "that" neighborhood, that could also introduce inaccuracies.

Something else you could do is a comparable NEIGHBORHOOD approach. Go back to 2019 and find another neighborhood nearby wherein homes used to sell for $300k for similar reasons (similar schools, bla bla bla). Maybe that 'hood does have some comps. We intentionally picked a "competing" neighborhood, because presumably a buyer today wouldn't pay $700k for a home in your neighborhood when they could pay $500k for one in that competing neighborhood, right? So if your research tells you that you could buy a home there for $500k, why would you buy here for $700k? You wouldn't! And you shouldn't, you should put in your $500k offer, knowing that if (when...) they don't accept it, you can just take your business to that very same neighborhood we just identified, and get better bang for your buck!

Jason Hirko · Answer

The appraiser doesn't have a Crystal Ball, so take their opinion of value as just that: their opinion. They don't have access to any different data than a Realtor with MLS access, so if you and your agent truly can't find comps, there just might not be any, and an appraiser is just going to start making a lot of adjustments to get to a value. Your best bet (as others have said) is an agent who closes a lot of deals in your city. They will have the best feel for your market and how this house compares.

Hannah Krebs · Answer

Thanks for your reply Nathan! It's a very low turnover area and kind of in a unique place. I live in a lake0heavy touristy area full of seasonal use and super expensive cabins, as well as lower quality homes in the towns surrounding the lakes so that makes it even more difficult. Expanding the search area a few miles would include a lot of non-waterfront (this house is waterfront) homes, a lot of lower quality homes in another neighborhood, and also million dollar mansions located on a popular nearby lake. Sigh.

Hannah Krebs · Answer

Haha yes! I do have a great agent but he seems a little shy about offering price opinions. Also I'm a control freak and a data analyst so I always want to find my own numbers anyway. Ha!

Nathan Grabau · Answer

Agree with @Jesse L. Weaver. The two ways to improve the access to comps is to increase you sale date range, which it sounds like you did, but then an appraiser is going to expand the search area. Are you in a low population area or just in a low turnover neighborhood? I would try to find similar neighborhoods in your expanded radius. +33% from Jan 2021 to now is a little hard for me to wrap my head around, but not crazy depending on the market you are in.

Resources for purchase price when there are no comps?

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