The Seller Wants $540,000; the Adjustments Say Otherwise
Subject: 1,850 sq ft, 3 bed/2 bath, original 1998 kitchen, 2-car garage, 0.18 acre, backs to busy 1200 West, new roof in 2023. The seller wants to list at $540,000 because an automated valuation says $538,000 and 'the neighbors got $545,000 last spring.' Closed comps in the subdivision: (1) 1,900 sq ft, updated kitchen, interior lot, $520,000; (2) 1,780 sq ft, original kitchen, one-car garage, busy street, $455,000; (3) 2,050 sq ft, updated kitchen, cul-de-sac lot, $545,000. A fourth, similar in size and condition to the subject but with an updated kitchen, is pending at $505,000. Market-derived adjustments: $75 per sq ft of GLA, $15,000 for an updated kitchen, $10,000 per garage bay, $20,000 for a busy-street location; lot differences within 0.03 acre need no adjustment.
1. Adjust the three closed comps and state the supported value range.
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Adjust the comp toward the subject: subtract when the comp is superior, add when the comp is inferior.
| Comp | Sale price | GLA | Kitchen | Garage | Location | Adjusted |
|---|---|---|---|---|---|---|
| 1 | $520,000 | 1,900 sf vs 1,850 → −$3,750 | updated → −$15,000 | equal | interior → −$20,000 | $481,250 |
| 2 | $455,000 | 1,780 sf → +$5,250 | equal | 1-car → +$10,000 | busy → none | $470,250 |
| 3 | $545,000 | 2,050 sf → −$15,000 | updated → −$15,000 | equal | cul-de-sac → −$20,000 | $495,000 |
The adjusted range is roughly $470,000–$495,000. Weight comps 1 and 3 most heavily - their size and condition bracket the subject and their net adjustments are moderate. Comp 2 is a weaker indicator because of the garage and size differences. Indicated value: about $485,000–$495,000. The pending at $505,000 is a directional check only; a pending price is an asking-side number and cannot be weighted like a closed sale.
2. How do you explain to the seller that the $545,000 sale and the automated value do not support $540,000?
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Start with arithmetic the seller can verify. The neighbor's $545,000 house was superior in three measurable ways: 200 more square feet (+$15,000), an updated kitchen (+$15,000), and a cul-de-sac lot instead of frontage on a busy arterial (+$20,000). Strip out $50,000 of superiority and that sale points to about $495,000 for the subject - it supports the top of the range, not $540,000.
The automated valuation is an algorithm. It does not know the kitchen is original, that the back fence sits on 1200 West, or that the roof is new (the one feature that adds value). Its error band is typically wide and it lags current local conditions.
Also guard against double counting: square footage and kitchen adjustments must be supported by actual paired sales, not by stacking the same $75/sf assumption in two lines.
3. The seller insists on $540,000 anyway. What should the licensee do, and what must the licensee not do?
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The seller sets the price; the licensee's duty is honesty, not obedience. If the seller insists, the agent may take the listing at $540,000 but should:
- Put the pricing advice, the CMA, and the seller's instruction in writing.
- Show days-on-market and concession history for overpriced listings in the subdivision.
- Flag appraisal risk - a financed buyer at $540,000 needs an appraisal near that number; a $485,000–$495,000 appraisal means renegotiation, a much larger down payment, or a dead deal.
- Set a written review date at 14–21 days with a price-reduction plan agreed in advance.
What the agent may not do is inflate the CMA, cherry-pick comps, or drop adjustments to win the listing. That is misleading and a license-law exposure, and it predictably costs the seller money through extended market time and later concessions.