Ask the Real Estate Agent: How Do You Value A Home Without Comparables?
Recently, we have been getting questions from sellers and buyers about how to value a home without any recent comparables.
We use a tactic called parallel analysis. Parallel analysis uses two strategies: time and geography.
Using the time method of parallel analysis, we will look at the last time that particular property sold. You’ll look back at the time the last time the property sold, and see what the same property type (condos, townhouses, or single family) sold for at the time. Then, you would compare the growth rates for those comparable to the present. If they have going up for 3 years for example, we would apply that rate to the last time the property sold and add on 10%.
Using the geography method, we will look at alternatives in other areas with similar options. For example, if you were looking for a home walkable to the metro in Arlington, you can compare it to other areas walkable to metro in areas in DC or Alexandria. If the home is the same size and has similar features as well as similar surroundings, you can use that as a benchmark for the valuation of the property.
Both of these methods are imperfect, but it does provide a very good hypothesis for home valuation if there isn’t any hard data available for your sale or purchase. Here at the Orange Line Living team, we have a lot of experience doing these kinds of analysis. Feel free to contact us at [email protected] or 571-969-7653 if you have any questions, comments or concerns.