Whether you’re buying or selling, pricing is one of the most critical factors in a successful transaction and often the first thing both parties focus on. Over the past twenty years, I’ve refined my pricing strategies through experience, instinct, and a deep understanding of market dynamics. But I also recognized the need for a structured, data-backed method to better communicate value and support confident decision-making.
That’s why I developed what I call my benchmark strategies. These are three distinct but complementary methods that give buyers and sellers clear reference points to help evaluate pricing in any market. They include:
Each method can stand alone, but together they form a powerful framework. They allow us to evaluate whether a home is fairly priced, overpriced, or underpriced based on both hard data and context. While elements of these tools are used in other industries, I have yet to see them combined and applied this way in residential real estate. That is what sets this approach apart.
Whether you are setting a list price, evaluating an offer, or trying to understand market value as a buyer, these strategies help you move forward with clarity and confidence.
First, I review a curated set of comparable sales that align in style, location, layout, and condition. For sellers, I keep the comp set tight. For buyers, I may expand the search. I typically go back at least 12 months, and up to 36 months when necessary to get a reliable picture of value.
I focus on price per square foot and calculate the average and median numbers. Then I choose a number between those two figures as the market benchmark for price per square foot. That number reflects how the market has valued similar homes recently, without being influenced by marketing or emotional bias.
I then apply this benchmark PPSF to the above-grade, tax-assessed square footage of each comp to calculate its benchmark value. Comparing that number to the actual sale price tells me whether it sold above or below expectations, and by how much.
Next, I look for trends in the data. I remove sales that are not truly comparable—homes with unusual features, outdated layouts, or non-arm’s length transactions. Homes that sold above benchmark often had recent renovations, better lots, or added features like pools or outdoor living spaces. Those that sold below were often dated, in need of updates, or on less desirable streets.
This is where experience matters. Often the biggest pricing gaps come from things the spreadsheet can’t capture, like curb appeal, layout efficiency, or market conditions at that time. When the data and these observations line up, I know we’re on solid ground.
Once the benchmark PPSF is in place, I apply it to the subject home to estimate its expected value. This gives us a neutral starting point. Then I compare that to the list price or offer price and evaluate how that premium or discount compares to similar homes. If a home is priced well above benchmark but lacks the features to justify it, that’s a concern. If it’s underpriced, that might be a strategic opportunity.
This gives both buyers and sellers a clear way to make pricing decisions based on reality—not guesswork.
This method adds another reference point. In most markets, homes sell for somewhere between 1.2 and 1.4 times their tax assessed value. To find that ratio, divide the sold price by the tax assessment from the year it sold. For example, a $780,000 sale on a $600,000 assessment equals 130 percent of tax value.
Outliers often point to unusual circumstances like tear-downs, off-market deals, or properties in extreme disrepair. I remove those to keep the dataset focused and relevant.
After calculating the ratio for each comp, I look at the average and median of that group. Then I apply the same math to the subject home using its current price and the tax assessed value from the same year. If the ratio falls way outside the range of other sales, we stop and ask why. Is it renovated? Undervalued? Or just mispriced?
This gives us another way to confirm the price is on target—or not.
This is the most rare method and generally reserved in areas with high turnover, like in condo buildings or in new home communities when most of the listings are being sold for the first time. When a home has a prior sale on record, we can estimate value using historical appreciation. I apply the compound annual growth rate, or CAGR, to see how much the home has likely appreciated over time.
For example, if a home sold for $875,000 in 2016 and similar homes in the area have appreciated by 4.5 percent per year, the current estimated value would be around $1.29 million. At 5.5 percent, it would be closer to $1.45 million.
The formula is:
(Current Value ÷ Original Price) raised to the power of (1 ÷ Years Held), minus 1, use AI for this! This shows the annual growth rate over time. You can also reverse the math to find today’s value given a known appreciation rate.
To find appreciation rates, I use tools like Redfin, Zillow, or Freddie Mac’s Home Price Index. For example, if prices in Arlington, Virginia are up 25 percent since 2020, that translates to about 5.7 percent annually. Just make sure to compare that with recent sales in the area to confirm it matches what’s actually happening.
This approach is especially useful when comps are scarce, the home hasn’t sold in years, or the data is noisy. It won’t replace a comp-based analysis, but it’s a strong secondary check that helps ground your pricing in the market’s broader direction.
Having sold over a thousand homes, I can usually get a sense of value in about 5 minutes. Sometimes I know what it’s worth before I even step through the front door. That kind of instinct comes from experience. But instinct isn’t enough—not when people are relying on me to guide them through one of the most important decisions of their lives.
That’s why I use this process. It’s not just about landing on a number. It’s about giving my clients the tools to understand where that number comes from and why it makes sense.
We also have to read the market in real time. Sometimes the price is right but the timing is off. Sometimes the home is perfect but buyer demand is soft. Pricing ahead of the market instead of chasing it can be the difference between selling quickly and sitting on the market.
The benchmark strategies give us the structure. Experience brings in the nuance. Together, they help us make smart decisions that stand up in any market.