SACRAMENTO, Calif. -- House prices are sometimes set by the seller and sometimes by a real estate agent, but more often than not, brokers indicate, they are the result of a compromise between the two.
"Estimating value is not an exact science," said Sacramento-area broker Bert MacBride. "It's a subjective analysis."
"Sellers are more sophisticated today," said another Sacramento broker, Judy Thompson. "They know about comparable sales. They check around their neighborhood to see what's been sold recently. Some visit new home subdivisions or go to open houses to get an idea what they should ask for their homes."
Unfortunately, she added, the information they get isn't always accurate -- or current. "Owners don't like to admit they got less than what they were asking."
Perhaps the most critical factor in determining price, Ms. Thompson said, is the need of the owner to sell. If the need is urgent, she suggests a house should be priced perhaps 5 percent to 10 percent below what similar dwellings recently have sold for in the neighborhood.
Real estate agents typically determine the asking price of a house by examining data from recent sales of comparable properties. But if a house is a one-of-a-kind, agents must rely on "their experience, background and market sensitivity," Ms. Thompson said.
Rather than true appraisals, the prices suggested by agents, brokers acknowledge, are their opinions of "market value." Real estate dictionaries define "market value" as the price agents think a property will bring under normal conditions on the open market in a reasonable period of time.
Comparable sales are usually available from local trade associations. Members provide detailed reports about listings and sales to a computerized service, operated by the association. The data not only is available to members, but may be purchased by other agents as well.
Most everything an agent knows about a house goes into the computer. "It can provide a prospective seller with information about comparable properties a foot long," said broker Dick Dunnigan in Sacramento.
The size of a house also may be considered in determining the value of a dwelling.
"Using square footage is a crude guide, but it can give us a starting point for establishing construction costs in a neighborhood," said broker Paul Batterson of Orangevale, a suburb of Sacramento.
Other sources of information are the county assessor's office and company sales records. "The assessor's office data gives us the broadest picture of sales, but it offers little detail," Mr. Batterson said. Agents also take into consideration the price of similar houses up for sale, he said.