Working as a real estate broker is a fascinating job, combining analytical assessment of fluid and dynamic markers with interpersonal skills and salesmanship. As a real estate broker, you're well aware of the fact that you're trying to buy and sell the homes that are the core of the American dream'and that's the rub. Finding the right price for a dream (or dream home) takes legwork and more than a few gut checks. You want to get the best price possible for the seller (which maximizes your commission), but you need to avoid pricing yourself out of the local real estate market.

Fortunately, there are a lot of tools that can help you with this, from appraisal services to home inspections to zoning ordnances in the city you're working in, plus talking to the seller. Your job is to find the highest price for the property that the market will accept. The biggest key to this is comparable sales.

Comparable sales are properties that have been sold in your region, recently, with comparable square footage, comparable construction and age and similar factors. A comparable sale will have both the listing price and the sale price attached to it; it's important that you find the prices that the houses you're comparing to have sold for, rather than what they were listed for. Listing prices are what the seller wants, sold price is what the purchaser actually paid for it, and the value of anything is what the buyer will pay for it.

Once you've winnowed down the listings to actual sales, look for points of similarity. Were the houses built at the same time? How does their square footage compare, in general? What about lot size, off street parking and things like a swimming pool, or spa or sauna? What improvements have been made to the house to make it more appealing by the owner? You'll want to get at least six comparable sales (with or without these factors) and throw out the high and low end sales prices, taking the average of what's left (average means "sum the asking price and divide by the number of houses sold" in this context.)

If you couldn't find six exact matches for comparison purposes, you'll want to take close matches and increase or decrease the sales price by comparing things like the view, road footage, the size of the lot, and other improvements. Running water (such as lakes and river banks or creeks) generally increase the value of the lot and the land. Proximity to schools is also a factor. Recent renovations, like a remodeled kitchen or bathroom are also big pluses to the asking price.

Never trust the owner's asking price as the initial assessment. Most home owners have a somewhat inflated view of the value of their home; it's full of sentimental value to them. It's where they raised a family, lived with their spouse, and made a lot of memories over the last few (or many) years. Look at property tax assessments as well ? they're in the public record, and easy to find. While you should ask the owner what they think the asking price should be, you should also ask them how they arrived at the figure. You will need to find them comparable properties with sold signs on them to show them what the market will actually bear.

Some cases in point and considerations:

Regional market trends can inflate the asking prices of houses. For example, communities with a demographic heavy in 20 and 30 year olds are full of buyers buying their first, second and third homes, and often times, people looking to sell their first or second home to upgrade to a larger one in the market, treating their home and property as an investment. With the housing boom of the turn of the 21st century, the housing prices skyrocketed, and skyrocketed even further with the profusion of refinancing and home improvement loans. Unfortunately, the housing bubble has burst, and housing prices are plummeting hard. This can be an especially difficult thing to tell to a home owner, that the house they own is worth less than what they initially paid for it. The only way you'll convince them is by showing them what other houses of comparable value in their market have sold for.

Markets with high military populations have a fair mount of market churn, which also drives home sale prices down ? there's always someone selling a house to recoup from a new deployment to a different base. Even if the seller isn't military, this will have a significant reduction on the asking prices for houses near the base or naval station.

Markets with changing demographics have very volatile housing prices, with asking prices rising as the demographics get closer to that 20-30 demographic and falling rapidly as it ages. Many people who have inherited a house have discovered that the asking price and the property tax assessments are out of coordination with one another, making unloading a house in the market difficult.

Again, ultimately, the value of a thing is what its purchaser will pay for it, and comparisons of comparable sales are the technique you need to find what that value is, and make the sale happen in a timely fashion. A commission on a house that never sells isn't a commission at all ? it's a burden and obligation on your listings to be dealt with, so do your homework on comparable homes and set the asking price accordingly.

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