There's a particular conversation that happens in real estate all the time.
Someone's neighbor sells their house for $625,000.
And suddenly, everyone on the street has a $625,000 house.
Or at least, that's what they tell me.
And I understand why.
If the house down the road has three bedrooms, two bathrooms, and a two-car garage, and your house has three bedrooms, two bathrooms, and a two-car garage, it seems perfectly reasonable to assume they're worth about the same amount.
But here's the thing.
Just because two houses are neighbors doesn't mean they're comparable.
And sometimes, the house that sold three streets over tells us considerably more about your property's value than the one directly across the road.
Let me explain.
A comparable sale isn't just a house that looks like yours
When I'm preparing a comparative market analysis, or CMA, I'm trying to answer a specific question:
What would a buyer likely pay for this particular property in the current market?
To answer that, I look at properties that have recently sold and consider how closely they resemble the home I'm evaluating.
Location matters.
So does square footage, age, condition, layout, land, amenities, and the timing of the sale.
But I'm not simply looking for houses that share a few characteristics.
I'm looking for properties that would have appealed to a similar group of buyers.
That's an important distinction.
A beautifully renovated ranch on a quiet dead-end road might appeal to a different buyer than a dated ranch on a busy commuter route.
Even if they have exactly the same number of bedrooms.
The house across the street might not be your best comparable
Imagine you own a three-bedroom ranch in southern Maine.
Your neighbor recently sold a three-bedroom ranch for $550,000.
Same neighborhood. Similar square footage.
Pretty straightforward, right?
Except your neighbor's house has a finished basement, a recently replaced roof, updated bathrooms, and a two-car garage.
Yours has an unfinished basement, an aging roof, original bathrooms, and a one-car garage.
That doesn't mean your house is undesirable.
It means the two properties offer different things.
And buyers will take those differences into account.
Now imagine another ranch sold half a mile away.
It has similar square footage, similar updates, a one-car garage, and an unfinished basement.
Even though it's farther away, it might tell us more about what buyers would pay for your house.
The best comparable isn't necessarily the closest house. It's the one that requires the fewest meaningful explanations.
Not all square footage is created equal
This one surprises people.
Let's say two homes both have 2,000 square feet of finished living space.
In one, nearly all that space is above grade, with a comfortable floor plan and generously sized rooms.
In the other, 600 square feet is in a finished basement.
Both may be perfectly lovely houses.
But buyers don't necessarily value those spaces the same way.
Basement finishes, ceiling height, natural light, moisture conditions, access, and permitted use can all influence how that space contributes to market value.
And in real estate reporting, above-grade and below-grade areas are often treated separately.
There's also the question of functionality.
A 2,000-square-foot home with long hallways and awkwardly positioned rooms might feel less usable than a thoughtfully designed 1,750-square-foot home.
That's why I don't like reducing a home's value to a simple price-per-square-foot calculation.
Square footage is information.
It's not the entire story.
Condition can make an enormous difference
Here's something I pay close attention to when comparing properties.
Not just whether a house looks updated, but what has actually been done.
A home with a new kitchen might photograph beautifully.
But if the roof is approaching the end of its useful life, the heating system is outdated, and the windows need attention, buyers may have some expensive decisions ahead of them.
Meanwhile, another house might have an older kitchen but a newer roof, updated electrical systems, efficient heating, and years of thoughtful maintenance.
Which one is worth more?
That depends on the properties, the market, and the buyers.
But I wouldn't automatically assume the prettier kitchen wins.
And when I look at comparable sales, I want to understand those differences.
A recently renovated house isn't necessarily equivalent to a well-maintained house.
And neither is necessarily equivalent to a house that has been neglected.
Those distinctions matter.
The lot can change the equation
In Maine and New Hampshire, land is often a major part of a property's appeal.
But acreage alone doesn't tell the whole story.
One house might sit on two beautiful, usable acres with a level yard, mature trees, and room for a garden.
Another might sit on five acres, most of which are wetlands, steep slopes, or otherwise difficult to use.
Five acres sounds more impressive in a listing.
But does it offer more value to the buyer?
Not necessarily.
Road frontage, privacy, topography, access, utilities, zoning, and permitted uses can all influence how buyers perceive a parcel.
The same goes for garages, workshops, barns, and other outbuildings.
A functional, well-maintained workshop may be a major selling point for a particular property.
A deteriorating barn that needs extensive repairs may be a liability instead.
That's why I want to understand what the land and buildings actually offer, rather than simply counting acres and square feet.
The date of the sale matters more than you might think
Let's say a house nearly identical to yours sold eighteen months ago.
It's tempting to use that sale as a benchmark.
But real estate markets change.
Interest rates change.
Inventory changes.
Buyer demand changes.
And sometimes, the balance between buyers and sellers shifts considerably within a relatively short period.
A sale from a year and a half ago might still provide useful context.
But I'd want to compare it with more recent activity before drawing conclusions about today's value.
I also pay attention to how a property sold.
Was it on the market for two days?
Did it receive multiple offers?
Did it sit for several months before selling?
Were there price reductions?
Did the seller offer concessions toward closing costs or other expenses?
Those details help explain the transaction.
Because the final sale price is important, but the circumstances surrounding it can be just as revealing.
Sometimes the sale price doesn't tell the whole story
Imagine two houses each sell for $500,000.
One sells for $500,000 with no seller concessions.
The other sells for $500,000, but the seller contributes $10,000 toward the buyer's closing costs.
Both transactions may appear in a quick search as $500,000 sales.
But the financial terms are different.
That doesn't automatically mean the second property is worth $490,000. Concessions need to be considered in context, including how they affected the transaction and what buyers were willing to pay.
Still, it's an important detail.
And it's one reason I don't like relying exclusively on automated home-value estimates or a quick glance at recently sold listings.
There's information behind the numbers that matters.
A good CMA is an exercise in judgment
People sometimes imagine that determining a home's market value involves entering a few details into a computer and waiting for a number to appear.
And there are certainly tools that can produce an estimate.
But a thoughtful comparative market analysis involves judgment.
I have to decide which sales are most relevant.
Which differences matter to buyers.
Which differences probably don't.
Whether a property's condition is comparable.
Whether its location, lot, layout, and amenities place it in the same competitive market as the subject property.
And whether recent market activity supports the conclusions I'm drawing.
It's not an exact science.
Two experienced professionals may reasonably arrive at somewhat different estimates, particularly when a property is unusual or there aren't many good comparable sales.
A CMA is also not the same thing as a formal appraisal.
But a carefully prepared CMA should explain why a value range makes sense.
Not just produce a number.
What about the houses that haven't sold?
Here's another interesting part of the equation.
I don't only look at sold properties.
I also want to know what buyers can choose from right now.
If your house is likely to compete with three other homes currently listed in the same price range, those listings matter.
They help us understand the alternatives buyers are considering.
But active listing prices are asking prices, not proof of market value.
A seller can ask whatever they want.
The interesting question is whether buyers agree.
Pending sales can offer useful clues, too, although the final contract terms may not be publicly available.
And expired or withdrawn listings may tell us something about how the market responded to a particular price or presentation.
All of that helps build a more complete picture.
So what should you do when your neighbor sells?
Be curious.
Look at the sale price.
But don't stop there.
Ask yourself:
- How similar was the house in size, condition, and layout?
- Did it have updates or features yours doesn't?
- Was the land comparable?
- How long was it on the market?
- Were there unusual circumstances surrounding the sale?
- What other similar homes have sold recently?
You may discover that your neighbor's sale is a very useful indicator of your home's value.
Or you may discover that it isn't particularly comparable at all.
Either way, you'll understand more than you would by looking at the sale price alone.
Your house deserves its own story
One of the things I love about real estate is that houses are rarely as interchangeable as they appear on paper.
Two homes can share the same number of bedrooms, bathrooms, and square feet, yet offer completely different experiences.
One might have the perfect workshop.
Another might have a wonderful first-floor layout.
One might have a beautiful private yard.
Another might be within walking distance of everything.
Those differences matter to the people who buy them.
And they matter when determining value.
So the next time someone tells you their neighbor sold for $600,000 and therefore their house must be worth $600,000, you can smile.
Maybe it is.
Maybe it isn't.
But I promise you, there's a little more detective work to be done before we know.
And that's the part I find interesting.