What do real estate comps mean?
A recent sale of a property in your neighborhood that is comparable to yours in terms of location, size, condition, and features is known as a “comp,” short for “comparable sale.”
How real estate comps are used by sellers
Comps are used by sellers, particularly those who are selling their homes for sale by owner (FSBO), to establish the appropriate listing price. You should be aware of comps even if you are selling your house with the aid of a real estate agent so you can be sure you are happy with the listing price your representative suggests.
How buyers utilize comparable properties
In order to determine how much to offer on a house, buyers consult similar sales. They want to make sure they do not overspend for the house they are buying, to be more precise.
How real estate comps are used by appraisers
When an appraiser visits your property, they will gather their own comparable sales to assist them to determine the fair market value of your house. There are a few reasons for appraisals to occur. Before closing, a buyer’s lender would often demand an appraisal, although occasionally sellers will request one in order to properly price their property.
MLS comps and real estate agents
A comparative market analysis (CMA) is produced by real estate agents using comparable properties from the local multiple listing service (MLS). It is a compilation of comparable sales in the area put together to aid the agent and seller in determining a fair listing price. Even when they are not working on a specific sale, savvy real estate brokers frequently run comps to monitor their local market and determine general trends.
Comparable homes are a tool used by nearly every real estate agent and realtor to help sell homes. When said this way, it may confuse people in how this works, but it’s not as complicated as it may seem. There are multiple ways that comps work in real estate to make everything go smoother and allow homeowners to sell their homes for more money, and in a shorter time. These are just the most basic four; there are dozens of more ways to make comps work for you!
Let You Know Where Your House Stands In The Market
Comparables are mainly here so that you can find where your home fits in the grand scheme of things. If your comps don’t sell quickly or are a much higher price than you initially put for your house, you can figure out what they’re doing wrong or right and decide how to apply it to your home.
There isn’t going to be some cookie-cutter perfect match home that is a replica of yours, so there may be some reworking to do, but if you focus on homes that are close enough to your own, they can still guide you through what to expect and how to sell faster.
Lets You Know How Valuable Your Home May Be
This question is a big one to which many people already think they know the answer. Unfortunately, asking yourself, “What is my home worth?” isn’t as useful as looking at substantial numbers. If a home comparable to yours is selling for far less than yours is listed at you need to consider if that’s why yours isn’t selling.
Unfortunately, this isn’t always the best course of action. First time home sellers almost always try to price their homes too high, while people desperate to sell will quickly list their home for pennies on the dollar. This information is why it’s essential to have more than one comparable property to calculate your price. It can also help to have a professional appraise your property and let you know their professional opinion.
Help You See What Upgrades Are Needed
Whether you’ve been putting off redoing your kitchen, or you want to remodel a bathroom, consider what’s available in your area. Are the other kitchens updated and gorgeous? Do they sell even with unfinished basements?
Look at your comparable and study them to see if they have anything your property could use and that you can add. Be smart with your money, though. A finished basement may sound like a good point, but homes with unfinished basements sell just as quickly, for a much smaller amount of work.
Allow You To Price Competitively
The final and best perk is that comparables allow you to price your property at a competitive price. If you want to sell faster, you can price lower, but you can generally gauge the right price based on what the comps are pricing their homes. Stage your home, deep clean it, and set it up for sale, because a comp will have you ready to let it go on the market.
How to find real estate comps
Sellers may either identify comps on their own or engage an agent to assist them with the research and pricing process. Here is the procedure for each choice.
Real estate agents and MLS comps
Since the data is often the most reliable, the local MLS is typically the greatest source of comparable property sales. You may discover a skilled real estate agent who is familiar with navigating the MLS and locating relevant comps for your home by using Zillow’s agent directory. Additionally, because they are locals, they can analyze comps by considering neighborhood patterns, property value growth, and price per square foot.
Many may provide a free CMA to prospective customers in an effort to win your business. It provides a ballpark estimate of what your house may sell for in your community and on the current market.
Can I locate local house comps without using the MLS?
Additional sources for obtaining comparisons include the following:
- Public property records. The county often maintains such information if you are looking for the sale price of a certain similar. You can conduct an online search in certain counties, but you might need to visit the courthouse in others. One thing to keep in mind is that seller concessions are not listed in county records. You will notice the final lowered price rather than the initial asking price if a seller reduced the price as a credit for certain necessary repairs.
- Zillow. Use the Recently Sold option to narrow your search on Zillow. Additionally, you may filter using a home’s ZIP code, square footage, and other attributes. You will not locate FSBO listings on the MLS, although Zillow frequently has them.
- Zillow pricing tool. Try this price tool from Zillow to locate comparable properties in your region. To discover recent sales, only input your home address. You may filter the results depending on which ones are closest to your house, and we will then estimate their worth for you.
What to take into account while locating real estate comps
Find at least three comparable houses that fit the following requirements.
- Location. Locate your search no farther than a quarter to a half mile from your house.
- Time frame. Include only properties that have recently sold—within the last three to six months, or less if your market is rapidly shifting.
- Size. Aim to keep within 300 square feet of the size of your home.
- Bedrooms/bathrooms. Include residences with the same number of bedrooms and bathrooms as your own home.
- Home’s condition. Take into account factors like recent updates, modernized interiors, or antiquated characteristics.
- Age of the home. Homes constructed around the same period as yours will provide the most realistic comparisons since main systems like the HVAC, plumbing, and roofing should be in comparable condition.
- Nearby features. Find properties close by that have similar characteristics to yours in terms of walkability, shopping and retail, closeness to the water, vistas, public transportation accessibility, and school rankings.
- Price per square foot. When determining comparison, real estate brokers look at price per square foot. Calculate your target price per square foot by dividing the sale price of a house by its square footage.
Tips on Looking for Real Estate Comps
Consider more than just the home’s cost and essential characteristics while you are analyzing possible comps. Make sure you carefully assess each property to see whether it is comparable.
- You should carefully review images found online.
- You should carefully read the description of the house. Do not overlook the finer elements, such as the local school system and the house’s utilities.
- Recognize that the listing might not contain all the details you want. A listing is only as good as the agent who creates it, and he or she is unlikely to include information regarding the house’s flaws or less desirable aspects.
- See the house in person if you can. Nothing compares to seeing a house and its surroundings for yourself.