SSS #328: Comp-Based Pricing (Willow & Townsend)

Livin' La Vida Luna y Luca

I think Luca just learned what an Indian accent is.

Luca: "Grandpa! Can you read me a book, please?"

Grandpa: "Sure! Let's read Frog and Todd."

Luca: "Don't you mean Frog and Toad?"

Grandpa: "Yeah... That's what I said. Frog and Todd"

Luca: 🤔🤔🤔

Luna & Me: 😂😂😂🤣🤣🤣

Comp-Based Pricing (Willow & Townsend)

I'm thinking about pricing a lot these days because we recently listed two projects for sale:

Willow:

We listed Willow at $1.995M, but that wasn't always the plan. Let's go through the timeline of how we arrived here.

08/2025: $1.630M - Most Recently Sold Comp (~1,200sf smaller)
06/2025: $1.695M - Our Expected Sales Price Upon Purchase
06/2025: $1.65M - Estimated After Repair Value as per Lender's Appraisal
01/2026: I learned a developer bought an addition+renovation project nearby for $775K. They'll need to sell for $1.9M to make a good profit.

Since the day we bought this project, I pegged $1.7M as my target sales price.

When I learned a friend was listing an addition+renovation one street over and they acquired it for $775K, I began to think the market could support more, but I still wasn't convinced.

Then, a developer on the same street as us listed his project as "Coming Soon" on January 15th for $2.195M. He went Active on the 19th with their first Open House scheduled for this weekend (Jan 24/25).

He told us $2.2M was his plan months ago, but I never believed him. I thought he was baiting us into listing high so he could undercut us, which would have made complete sense. His home is meaningfully smaller, has fewer bedrooms, and doesn't even have a finished basement.

But he did it. I almost spit out my coffee when I saw the email from Zillow.

We weren't exactly finished with our project, but we wasted no time. We hired cleaners to come in last Sunday, arranged for staging on Monday, and scheduled photography for Tuesday. We listed as Coming Soon on Monday with renderings and converted to Active on Wednesday with real pictures.

The Broker's Open was Thursday, and the feedback was clear: We're a much better value.

BUT that doesn't mean we'll sell at this price.

I'm willing to admit we're throwing an Aaron Rodgers-sized hail mary here. There's very little data to support our asking price. We're simply taking advantage of a momentary gap in the market.

There are only 9 homes listed for sale in this town right now. One is a 1BR apt. Five are not move-in ready. Three (including us) are newly renovated, and we're priced directly in the middle despite being the largest home with the most functional floor plan and best design.

If we receive an offer at or near our asking price by the end of February, I'll concede it's 90% timing luck and 10% skill.

If we end up having to do a price improvement in ~45/60 days, it won't be the end of the world, and the logical side of my brain will scream, "I TOLD YOU SO".

Every bone in my body says this house would sell yesterday for $1.8M, but I can't realistically walk away without finding out if $2M is in play. If the guy across the street listed at $2M, I would have been happy to list at $1.8M, but he didn't, so I couldn't.

Time will tell if this decision pays off.

Townsend:

More of the same at Townsend:

03/2025: $2.599M - Most recently sold comp (in a better location)
03/2025: $2.200M - Estimated After Repair Value as per Lender's Appraisal
04/2025: $2.35M - Our Expected Sales Price Upon Purchase
07/2025: $2.45M, 2.475M, 2.525M - Sold comps #2, #3, & #4

Despite underwriting this project to a $2.35M exit, we listed at $2.588M because of other homes on the market.

We have either more square footage (6,800), bedrooms (7), or bathrooms (8) than all comps. Yet we're priced below the average of all 6 ($2.68M).

We came in ~80K below average because we don't think the consumer will value the incremental beds, baths, or square footage. After a certain point, it's just more "space" to fill, clean, condition, etc.

The higher-priced comps might make an argument for location or lot size, but I don't think retail buyers will see it that way.

This is quite a situation we've found ourselves in. There are 13 homes listed in this town right now, and more than half of them are direct competition (with at least 2 more coming online in the next 45 days). I'm afraid buyers will suffer from the paradox of choice.

If Willow is a hail mary, Townsend is more of a coin flip. I can see it going either way. The other thing we have working for us on Townsend is it's still ~6-8 weeks away from completion. If a buyer doesn't commit pre-construction, we will pull it off the market and relaunch at an improved price.

I'll end with this: I absolutely love the fact that I'm documenting these pricing decisions. I can't wait to find out if we were right or wrong and reconcile it later.

It's like Babe Ruth stepping up to the plate and pointing his bat to center field. I could strike out. Or I might knock it out of the park. Either way, I'm calling my shot, and I'll live with the results.

🤝