How to check if your house is being priced correctly

Determining the fair market value of a home when listing it is a delicate task. Too high, and no one shows up. Too low, and a seller leaves money on the table.

To get a more accurate assessment of a home's value, agents create what is called a comparative market analysis that compares a property against at least three others that recently sold in a neighborhood or community.

Few homes are exactly alike, so a good comparative market analysis considers and adjusts the values for factors that distinguish one home from another. But it never hurts to take the time to verify the calculations.

First, it might be helpful to know what goes into an analysis. The reports that sellers get generally compare the following characteristics from at least three to 10 homes:

• Where the properties are located; ideally they should be in the same neighborhood
• The type of property — Is it two stories? A single-family home? A ranch? A townhouse?
• The size of the respective lots
• When they were built
• When they were sold
• The number of bedrooms and bathrooms
• Exterior materials

These questions will help you verify the information in the report.

Make sure the homes are as much alike as possible. If they weren't alike, you'll want to check what sort of adjustments went into the calculations.

• Do the homes being compared have similar square footages, and if not, how were the differences accounted for?
• Are the homes in the same neighborhood? If there aren't enough in the area, were homes from an area with the same quality of schools, crime rate, noise levels and walkability used?
• Are the lot sizes comparable? If not, was the square-foot value of a comparable lot accurate?
• Are the ages of the homes similar?
• Did the agent adjust for any renovations made to the properties?
• Did the agent adjust for the condition of the homes?
• Do the properties have the same number of bedrooms and bathrooms? If not, was the adjustment for an extra bedroom or bathroom accurate?
• Are there any special features accounted for, such as fireplaces, patios, garages and finished basements?
• Did the agent document the cost of adjustments in the analysis?

Pro tip: A comparative market analysis contains a lot of data and uses complicated mathematical calculations. If you don't know any real estate professionals who can check the work, it's a good idea to call your municipality's planning commission to see if they can help.

Look for recent sales using similar financing and adjustments to sales price.

• Were the comparable homes sold in the last three to six months?
• If not, were sales prices adjusted for changes in the market such as higher interest rates or more inventory?
• Did the buyers of the comparable homes use similar financing?
• Did the sellers of comparable homes make any concessions to the buyer? If so, does the report consider their impact on value?
• Did the agent adjust for the time of year sellers sold the homes, knowing that sales are often highest prior to the start of a school year?

Pro tip: An agent who has experience selling homes in a particular neighborhood is more likely to be attuned to differences between it and other neighborhoods.