What Are Comps in Real Estate?
The real estate market comps represent similar houses in your neighborhood that have recently sold. For example, if you’re considering the possibility of a house with three bedrooms and two bathrooms, You can look at similar properties within the same neighborhood that have recently sold. This can give you an idea of what you could be paying for the type of house you’d like to reside in.
Many factors, such as the number of bathrooms and bedrooms, amenities like the pool or garage or square footage, and many more, determine comps.
Who Uses Real Estate Comps?
Comps can benefit many people working in the real estate industry. They’re essential for homebuyers and other types of people too.
Sellers
When selling a house, the sellers must know the price that similar homes in the region were sold for recently. This will give them an idea of the market’s conditions and the amount they should put into the house they sell.
Buyers
Buyers use comps to determine how similar homes are selling in the region concerning similarity. This helps buyers decide whether the property they’re considering is reasonably priced. If the home is listed at a premium cost of asking, buyers can utilize comps to bargain.
Agents
Real estate agents may use comps when it comes to buying and selling. Comps can help sell because it allows agents to determine whether the price they’re putting on the market is reasonable. When it comes time to buy the property, agents can help buyers find houses within their price range based on comparables.
Appraisers
Like appraisers, appraisers utilize comps to assess a home’s value and determine a house’s value. With the help of comps, appraisers will determine if a price for a home is valid or whether they are worth more or less. Mortgage lenders and appraisers collaborate, and if an appraiser can determine the value of a home by comparing it to comparables, and the mortgage lender agrees, they will decide to approve a mortgage following the appraisal.
How to Find Real Estate Comps
Before looking at similar properties, you must be aware of what you’re comparing them against.
Check the house for any signs of damage.
When you look at the house you’re looking to purchase, look at the number of bathrooms and bedrooms, the amount of livable square footage, and the total square footage. Also, look at whether the roofing is in good condition and the major appliances and systems like the refrigerator and the washer and dryer. Water heater, air conditioning unit, along with electric panel. The location is also essential; therefore, ensure to include this in your investigation.
Find home sale sites.
When you have a concept of what your home comprises, you can begin searching for homes recently sold in that region. Utilize websites like Redfin, Zillow, and Realtor to narrow your search. Be sure to look at recently sold properties (not houses for sale).
Use the MLS
The Multiple Listing Service, also known as MLS, is a market search database local to each region. Many real estate agents utilize the MLS to search for comparables that they can share with their clients or sellers.
How to Get Real Estate Comps Without an Agent
Suppose you’re planning to purchase or sell your house without a real estate professional’s assistance or doing preliminary research. In that case, you can try to discover comparables without the assistance of an agent. Be aware that they may work differently for you.
Agents can use MLS websites that have the most up-to-date and accurate information. Websites such as Redfin, Zillow, and Realtor can be helpful, but they could have outdated data. For instance, a property may have sold recently in the region you’re interested in; however, the listing isn’t changed by the agent who is listing it. This means that you need access to up-to-date details, which could affect your study.
If you’re still looking for comps without the help of an agent, you can search for the public records of the property. Most municipalities have them available online or go to your appraisal office in the county.
While it’s possible to locate comparable homes that an agent does not represent, a knowledgeable person with extensive experience with houses in the area will assist you in finding the perfect home for the best cost in the end.
How to Determine Real Estate Comps
There are several methods of determining comparisons. While it’s good to search for general comparatives in size and features, there are some particular comps. For instance, you could see similar floor plans if you search for a home in an association or subdivision. Utilize similar floor plans from homes located in the vicinity to determine if they are similar to the house you’re hoping to purchase or sell.
It is also possible to compare similar properties that recently sold, but “recent” may be a bit subjective and contingent on the current market for real estate. If the housing market is booming, you might be able to limit your search to the past couple of weeks. If you’ve experienced slow, you can expand your search to the past few months.
After you’ve collected enough information from your comps, you’ll be able to estimate the house’s value. The easiest method is to divide your home’s selling price by the square footage. This is equivalent to the cost per square foot, also known as PPSF. You can calculate the average if you have the PPSF of a couple of houses.
While it’s not the amount you purchase or sell your home for, it could provide a reasonable estimation of the property’s value before you embark on the procedure.
