Why You Can’t Use Your Neighbor’s House to Decide What Your Home Is Worth

One of the biggest mistakes I see sellers make, especially here in Northeast Texas, is assuming their home is automatically worth whatever price their neighbor has their house listed for.

It’s an understandable instinct. We all keep an eye on what’s happening in our neighborhoods. When we see that big “For Sale” sign next door with a price that looks high, it’s tempting to think, “If they’re asking that much, mine must be worth at least the same.”

But that’s often a costly mistake for both sellers and buyers. It’s something a good realtor or buyers agent will caution you against.

In Dallas, It’s Different. Out Here, It’s Not.

In big cities like Dallas, many neighborhoods have homes that are practically clones of one another. You’ve seen those developments, long streets lined with houses built by the same builder, with the same square footage, same layout, and same lot size. In those places, using your neighbor’s list price as a reference point can be somewhat helpful. Even there, though, it’s not foolproof, because condition, updates, and timing still make a big difference.

But in Northeast Texas, things are different.

Here, every property tends to be unique. One house might sit on 2 acres, while the next one has 10. One house might be fully remodeled inside, while the neighbor’s still has shag carpet and paneling from the 1970s. One property might have a giant metal shop, a pond, or custom outbuildings, while another has none of those things.

That’s why trying to peg your home’s value to your neighbor’s listing price can steer you completely off course. A skilled sellers agent or realtor knows how dangerous that assumption can be.

A Listing Price Doesn’t Equal Value

Here’s a critical concept every seller and buyer needs to understand.

A house being “on the market” doesn’t mean that’s what it’s worth.

A list price is simply a seller’s hope. Sometimes it’s well-researched and aligned with market reality. Other times it’s pure wishful thinking.

I’ve seen sellers pick a list price because:

• They “need” that amount to pay off debts.

• They heard from a friend that houses in their area are going for $500,000.

• They added up the cost of every upgrade they ever did and want it all back.

• They simply like round numbers.

None of these reasons determine market value.

What determines value is what a buyer is actually willing to pay and, importantly, what an appraiser and lender will support if the buyer needs a mortgage. We discover that information only by looking at closed sales, not active listings.

This is why working with a knowledgeable realtor, sellers agent, or buyers agent is so important. We dig into the real numbers so you’re not making decisions based on wishful thinking.

The Story of Two Neighboring Homes

Let me share a real-life example that perfectly illustrates why you can’t assume your neighbor’s price is your price.

A while back, we were contacted by homeowners who wanted to sell their house. Their neighbor, whose house was the same size and style, had recently listed their property for a certain price. Naturally, our sellers figured they should ask for the same amount.

But when we researched comparable sales in the area, it became very clear that the neighbor’s home was priced about $100,000 too high. All the recent closed sales of similar properties were coming in much lower.

We advised our sellers to list at true market value instead, even though it was significantly below what the neighbor was asking. Thankfully, they trusted the data and followed our recommendation.

Here’s the best part.

Because the neighbor’s home was overpriced, our listing looked like a great deal in comparison. Buyers flocked to it, and we had it under contract in under seven days. Meanwhile, the neighbor’s overpriced home sat on the market and sat and sat until they eventually took it off without ever selling.

Had our sellers insisted on matching their neighbor’s price, they’d likely still be sitting on their property today. That’s the value of having an honest, data-driven sellers agent or realtor guiding the process.

Active Listings Are for Strategy, Not for Value

Many sellers think the active listings in their neighborhood are the best place to check their own home’s value. It makes sense why people look there. It’s the most visible information, after all.

But active listings are only useful for one thing, which is pricing strategy.

They tell us:

• How much competition there is.

• How many buyers might be choosing between similar homes.

• Where we need to price to stand out.

But they do not tell us what buyers are actually willing to pay. For that, we need to look at closed sales, the homes that have actually sold.

A savvy buyers agent or realtor will always caution you not to fall in love with the list price. It’s the sales price that matters, because that’s what the bank, the appraiser, and the market are willing to agree on.

How We Determine Market Value

Here’s how professional realtors, sellers agents, and buyers agents evaluate a home’s true market value.

1. Start with sold comparable properties (comps).

   • We look for homes that have sold in the past 3 to 6 months.

   • We choose properties as similar as possible in terms of square footage, age, location, lot size, and condition.

2. Adjust for differences.

   • If one comparable has a remodeled kitchen and your home doesn’t, we adjust the value downward.

   • If your home has a big shop, barn, or additional acreage, we add value compared to a comp that lacks those features.

3. Calculate a price-per-square-foot estimate.

   • We average the adjusted price per square foot from multiple comps.

4. Factor in current market conditions.

   • Are prices trending up or down? Are homes sitting longer on the market? A good realtor or sellers agent watches the data constantly.

5. Consider special property features.

   • Pools, ponds, fencing, outbuildings, high-end finishes, or significant repairs can dramatically impact value.

6. Review buyer behavior.

   • A buyers agent often shares firsthand insights into how buyers perceive different features or price points.

This approach ensures you’re pricing your home realistically, rather than basing your price on an active listing that may never sell.

Market Value vs. Appraised Value vs. Tax Value

Another common confusion for sellers, and sometimes buyers, is the difference between market value, appraised value, and tax-assessed value.

• Market value is what buyers are willing to pay right now in the open market. This is what your realtor or sellers agent helps you determine.

• Appraised value is what a licensed appraiser says your home is worth, usually for the lender’s protection. It might match market value, or it might be higher or lower depending on how conservative the appraiser is.

• Tax-assessed value is what the county thinks your home is worth for property tax purposes. It’s often very different from market value and shouldn’t be used to price your home.

Sometimes market value is higher than the appraised value, especially in a hot market. Other times, it’s lower. That’s why relying solely on your tax statement, or your neighbor’s listing price, can lead you astray.

A Realtor Makes All the Difference

At the end of the day, figuring out your home’s true value isn’t something you should guess at. It’s too important. Whether you’re a seller hoping to get top dollar, or a buyer trying not to overpay, working with a knowledgeable realtor, buyers agent, or sellers agent can save you from major financial headaches.

A great agent doesn’t just look at the neighbor’s price and call it good. They analyze sales data, study trends, understand buyers’ expectations, and help you position your home correctly in the market.

So before you assume your house is worth whatever your neighbor is asking, talk to a trusted real estate professional. It could save you time, money, and a whole lot of stress.

If you’re thinking about buying or selling in Northeast Texas, or just want to know what your home might actually be worth, reach out to a realtor or buyers agent who understands this unique market. Because in real estate, knowledge truly is power.

If you are looking to buy or sell property in Northeast Texas, call me! Leah Rolen 469-744-5309