What You Should Know About Real Estate Comps
Real estate comps is a term that refers to homes located in the same area and that are similar in size, condition and features as the home you’re trying to buy or sell.
Buyers look at comps when deciding what price to offer on a home. Comps help sellers determine how to best price their home for the market. Real estate agents look at comps to stay on top of the local market.
Here’s what you need to know about real estate comps.
Location is the top priority
If you’re trying to price a home or figure out its value, you should look nearby. The market is based on location, so keeping as close to the property as possible—within the same neighborhood is ideal—is the most effective approach. If you can’t get enough comps nearby, it’s OK to expand your search a bit.
Look for homes currently pending
A pending home means that a buyer and seller have made a deal, and that deal will reflect the most up-to-the-minute stats on the market. A good agent can use her network to get a fairly accurate idea what the ultimate sale price or range will be for a pending deal. Try to stick with sales in the past three months and never go more than six months; older data isn’t reflective of the current market.
Factor in home features
Once you have location and timeframe, look for homes with similar features that have sold, as opposed to comparing price per square feet. While the latter is helpful, it won’t take into account factors such as views, a new designer kitchen or a finished vs. unfinished basement. If you have all three bedrooms on the top floor, look for something similar. Try to compare your property to like properties in terms of traits like total size, number of bedrooms and bathrooms, and size of the lot.
Putting your trust in a good local agent will keep you from agonizing over the petty details of each comp. Your agent is likely familiar with some of the recent sales and can shed light on why one comp fares better than another. You may not know that one home was next to a fire station or across from a parking lot. Or that another didn’t have a real backyard. But your agent will know and can help you see how these small nuances can affect a home’s value.