When determining a home’s value and accurate listing price, you need to consider several different things. As a seller, you need to ensure that you are coming up with a fair price so that your home sells and everyone walks away happy.
If you’re a buyer, you want to know how much to budget for the home you want, and come to the table with a respectable offer that’s backed by research. This is where real estate comps come in.
Real estate comps, short for real estate comparables, are recently sold properties that have similar characteristics to the home you are either looking to purchase or to sell.
People use real estate comps to determine the realistic market value and proper price of a home by analyzing factors such as size, location, and features, among others. This approach proposes that a property with roughly the same features will have basically the same value (or close).
The first comparable factor that comes to mind when thinking of real estate comps is square footage, and while that should be nearly identical, other characteristics should be analyzed as well. Here are some characteristics that should be similar in order to determine the home in question’s value.
Ensure that the property you’re looking at is within the same neighborhood and within a quarter to a half-mile away from the home you’re trying to determine the value of.
[Related: Seattle’s Current Housing Market]
In order to get the most accurate value approximation, your search should only include homes that have sold recently. Check out properties that have sold within the past three to six months.
The general rule of thumb is to stay within 300 square feet of your home’s size when looking for real estate comps.
Even if the size is the same, the number of bedrooms and bathrooms could be different. You’ll want to match the number of different rooms for the most accurate price estimate.
Consider recent renovations, outdated features, and updated or repaired interiors and match them up as best you can with your home.
[Related: Guide to Home Appraisals]
It may go without saying that you should be comparing homes that were built at approximately the same time, since the style and major systems such as HVAC and plumbing will be similar.
Even if they’re the same in every other way, it won’t make sense to determine the value of a beachfront property by comparing it to one in the woods. Find homes that are the same in terms of close retail and shopping centers, walkability, schools, and public transportation.
Why Should You Analyze Real Estate Comps?
While analyzing real estate comps, you can learn how certain factors impact the value of a home. This will help you figure out how to adjust the sales price of your home if you’re selling, or your anticipated closing costs if you’re looking to buy.
[Related: Six Mistakes New Homebuyers Make]
How to Find Comps
So, how do you find out all of this information? Luckily, most of this information is available online, either through the Multiple Listing Service, free sites, or public online records.
Multiple Listing Service
The Multiple Listing Service (MLS) is an official database where agents list their homes for sale. This database contains extensive information for homes that have just sold as well as those that are still waiting on the market.
The MLS is one of the most valuable (and accurate) tools when it comes to exploring real estate comps, but you can only access it with assistance from a licensed real estate agent.
Free Sites Without an Agent
If you’re looking to analyze real estate comps without the help of an agent, a number of websites collect information taken from local listing services. Although these free sites are accessible to the public, the information can often be outdated or inaccurate, so be weary when browsing.
Public Property Records
Public property records are another method of finding real estate comps. Depending on your location, you can usually find these records online, but they tend to have limited information.
Benefits of Real Estate Comps to Home Buyers
Real estate comps are a useful resource for those looking to purchase a house because they demonstrate how much buyers have historically paid for similar properties. After analyzing and comparing certain factors of comps, buyers can come to the seller with a well-thought out offer and knowledge that can help during negotiations.
Benefits of Real Estate Comps to Home Sellers
Home sellers also benefit from real estate comps, especially if they’re working independently without an agent, since they can provide an objective way of determining a listing price for their home. Because many home sellers have emotional ties to their home, that may skew their expectations, so comps are helpful for finding an appropriate listing price.
Sellers can also use their knowledge of comps to defend their home’s existing worth to any buyer looking to low-ball their offer.
[Related: How to Buy Off-Market Homes]
Seattle Mortgage Planners Can Help
If you’re looking to purchase a home, Seattle Mortgage Planner is here for you. Check out our quality resources for new homebuyers, including information on the mortgage process. Looking to sell your home or refinance? We can help with that too.
Contact us today to schedule a consultation.