I spend a lot of time talking about and researching them.
You may have heard the phrase a time or two while watching HGTV.
Comparable sales aka ‘Real Estate Comps’, is a term home buyers and sellers should understand. Comps refers to homes located in the same area and very similar in size, condition and features as the home you are trying to buy or sell.
For buyers, we look at comps when deciding what price to offer on a home. Sellers rely on comps to determine how to best price their home for the current real estate market. High quality real estate agents constantly review comps to stay on top of their local market. If you are planning to buy or sell, it is useful know how to analyze comps.
Keep the following tips in mind when considering comps.
How Important Is Location When Looking at Comps?
If you are trying to price a home for sale or understand your home value, looking in your immediate surroundings is key. The real estate market is based on location. So looking in and around the same neighborhood as your property is the best approach.
If the immediate neighborhood does not produce enough comps, then it’s time to expand your search a bit. Just keep in mind that you need to determine a boundary. A local school district is an example of a boundary you would need to stay within when looking at comps.
How Does Timing Affect Real Estate Comps?
When looking for comps, homes that are currently pending for sale or have an “active contract” are the best comps to review. These homes are fresh pieces of data that will give you an idea of the market conditions right now.
A good local real estate agent with her ear to the ground can typically get a fairly accurate idea what the final sale price or range is for a pending deal. It’s best to look at sales in the past 90 days. Be careful not to go too far in the past because that older information may not reflect your current market.
How Does Home Features Affect Real Estate Comps?
When looking at comps, you also want to look at sold homes with similar features. Some real estate agents may rely on price per square feet. Although this is useful to a a degree, it doesn’t factor in amenities like great views, renovated kitchen and bathrooms.
Compare your property to like properties when it comes to items like
- Space
- Number of bedrooms and bathrooms
- Size of the lot
You can also learn to look at homes that have all bedrooms upstairs if you have a similar floor plan. All of this information will give you a clearer picture of home values.
Should I Obsess Over Real Estate Comps When Buying or Selling a Home?
It’s easy to obsess and drive yourself crazy when reviewing every single detail of each comp. You don’t have to. This is where a good real estate agent will help you make sense of it all. Local real estate experts will be familiar with recent sales and help you understand which comps are better and why.
Do you have additional questions about real estate comps? Let me know in the comment section below.