How Are Real Estate Comps Determined?

The price of a home is determined by looking at several key features including the time of year, property location, market trends, and most importantly, the real estate comps. Real Estate comps are a bunch of properties that share comparative attributes, making them ideal for value comparison. Typically, comps also come from the same recent time period, location, size, condition, and features.

Real Estate comps are usually determined by one of two parties – a real estate agent or a licensed appraiser. Real estate agents or appraisers will hand-select comparable properties in the same location if possible or in a nearby area.

appraiser

For example, if you sell a home with 3000 square feet, you will want to compare it to other similar properties in the same general area. It wouldn’t check out to compare a home with properties that are 2000 feet of the residing area in some other location.

If possible, it also makes sense to use comps with similar characteristics such as the same number of bedrooms and baths, similar age, similar amenities, and a similar lot.

Finding a comparable home is unrealistic so “adjustments” are made from house to house. Appraisers and real estate agents will make pricing adjustments up and down based on the qualities and shortcomings of the comps compared with the subject property.

At the point when the comps have been determined, they will be placed into a report. For an appraiser, it will be a uniform evaluation report. For a real estate agent, it will be in the form of comparable market analysis (CMA).

Who Uses Real Estate Comps?

A home seller might utilize real estate comps to decide on a suitable asking value for their home. Homebuyers additionally consider real estate comps to check whether a listing value matches that of comparable homes inside the real estate market.

Real Estate Comps aren’t simply a tool for home buyers and sellers, be that as it may. Numerous real estate professionals along the way exploit them as well. Assuming you’re working with a real estate agent, for instance, the person in question will involve a bunch of comps to investigate properties in your price range.

What to Consider When Finding Real Estate Comps?

Whether you’re an expert in the real estate business, or simply an eager home seller or buyer pulling comps, there are a few important features to consider. Let’s dig up into a few of them…

  • Location: Limit your search to a quarter to a half-mile from your home. A two or three-mile sweep is the thing you ought to draw your lines for while you’re attempting to compare one property to another in the neighborhood. be setting your limits when you’re trying to compare one property to another in the local area.
  • Time Frame: When looking at recent sales in the area to determine the value of the home, recency is a big factor. Just include homes that have sold inside the beyond 3 to 6 months — or less assuming your market is evolving rapidly.
  • Size: Attempt to remain inside around 300 square feet of your home’s size.
  • Bedrooms/Bathrooms: Incorporate homes with a similar number of bedrooms and bathrooms as yours.
  • Condition of Home: Factor in things like ongoing redesigns, refreshed interiors, or obsolete features.
  • Age of Home: Homes built around a similar time as yours will be the most reliable comps since significant frameworks like rooftops, HVAC, and plumbing ought to be the incomparable condition.
  • Neighborhood Features: Find homes that line up with yours regarding walkability, shopping/retail, waterfront closeness, views, school ratings, and public transportation access.
  • Price Per Square Foot: Real estate agents use price per square foot to identify comparable. Divide the deal price of a home by its square footage, then compare that number with your own ideal cost per square foot.

Final Thoughts on Real Estate Comparable

Real Estate comps are a basic part of pursuing the most ideal choice while you’re considering selling or buying real estate. No matter how much time you spend looking at real estate comps, assigning value to a home isn’t an exact science. Eventually, a house is worth what somebody will pay for it. By understanding the factors that influence your home’s price, you’ll be better prepared to make informed decisions.


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