What Are Comps?
“Comps,” or comparable sales, refers to homes located in the same area with very similar size, condition and features as the home you are trying to buy or sell. Buyers look at comps when deciding on a price to offer for a home, and sellers use them to figure out how to best price their home for the market. Real estate agents look at comps as a way to keep on top of their local market.
Location Is The Highest Priority
When trying to price a home or figure out its value, you need to look at houses nearby. The market is based on location, so comps need to be as close to the subject property as possible, usually within the same neighborhood. If you can’t get enough comps nearby, you can keep expanding out, but there will always be a boundary, such as a school district, that you need to stay within.
The best comps are currently “pending” homes because they are part of live market data. This means that a buyer and seller made a deal which reflects the most up-to-the-minute stats on the market. A good local real estate agent can get a fairly accurate idea what the ultimate sale price or range is for a pending deal. Stick to home sales in the past three months, and never go more than six months, because older data is not reflective of the current market.
Factor In Home Features
Once you get location and timeframe, look for homes with similar features that have sold, as opposed to comparing price per square feet. While the latter is helpful, it doesn’t consider factors such as views, a new designer kitchen or a finished vs. unfinished basement. If your house has all three bedrooms on the top floor, look for something similar to compare your subject property to. You can make adjustments once you find similar homes.
Don’t Overanalyze the Comps
Put your trust in a good local agent to help keep you from worrying about the petty details of each comparable home. Your agent should be familiar with some of the recent sales, and can help shed light on why one comp is better than another. You may not know all the details of each home, but your agent will.