Everything You Should Know About Real Estate Comps

By: ROS Team October 8, 2021

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In real estate, everything is relative. What is the sales price? How much should you be asking for when selling a property? Is the actual value of a house determined by the amount of money it takes to buy it? Deciding on the best possible price requires lots of information and can depend on several different factors, like the property type, location, time of year, and real estate market trends. Real estate comps help you determine answers to some of these questions.

What are Real Estate Comps?

Real estate comps, or comparables, are properties that are similar in value in the same location. You may estimate the value of your home using information such as the number of bedrooms and bathrooms, its living space size, and where it is located.

If you want to buy a house but are concerned about it being overpriced, looking at recent sales in the neighborhood might help you figure out what it is worth.  This will, in turn, help you decide how much to offer. Comparing real estate prices is mainly used to calculate the worth of properties, which is essential for many reasons, from purchasing, selling, and investing in properties to generating housing market forecasts.

How Do Real Estate Comps Fit In?

Comps can benefit real estate agents and those searching for homes by encouraging them to study various properties based on the real estate comps. Real estate comparables can be an essential tool when making an informed decision about your house, or when helping a buyer find their new home. Let’s see how real estate comps can be helpful to people.

real estate comps buyers

For Buyers

If you want to purchase a house, real estate comparables are an excellent way to get a sense of a home’s value. Even if you’re sure you’ve found your perfect home, a review of recent real estate sales in the area can reveal what similar houses in the area have sold for. This is helpful when determining whether the listing price is fair before making an offer on a property.

For Sellers

Are you wondering about what the comps are for your house? If you are trying to sell, you’ll need to determine how to competitively price your home so that it generates the maximum amount of interest among potential buyers. Additionally, this may also assist you in knowing what aspects of your home to feature when you advertise your house.

real estate comps sellers

For Appraisal

The property appraisal is a crucial stage when selling a house. When done at the buyer’s request, an appraiser examines the property to assess its value. An appraisal will determine selling data and additional criteria such as the comps for estimating the property’s actual value.

For Realtors

To do a comparative market study, real estate agents use multiple listing service comps (MLS comps) to collect relevant information. This proves beneficial during the listing or buying process.

How to Find Comparable Properties for Your House

Whether you’re trying to buy or sell property, you should research your options thoroughly to ensure that you end up making the best possible financial decision. Let’s examine the several approaches to accomplish this.

  • Do Your Research

A bit of web research will provide you with all the information you need to make your comparisons, even if you decide not to talk to an agent. You can use a site like NYRentownsell.com to locate comps quickly and for free.

  • Pull MLS Comps with a Real Estate Agent

You may find that the MLS comps are fantastic resources, but they’re only accessible to real estate brokers and appraisers and not the general public. To obtain the comps database, you’ll need to work with a real estate agent. In doing so, you will also gain access to an expert who knows how to conduct and read comps data.

Using Property Comparable

Whether you’re an experienced real estate agent or a novice home buyer, take note of the following when considering comps.

Using Property Comparables

  • Location

Location is significant. A 500 square-foot apartment in Manhattan and a 5,000-square-foot house in the country can vary drastically in cost just because of their locations. While most comp properties are within a mile of the site, comps can vary by location in rural areas.

  • Condition

The quality and condition of a home can affect its market value. When assessing a property for potential purchase, consider its overall condition.

  • Age

The fact that comparable properties have the same number of bathrooms and bedrooms is irrelevant when it comes to their ages. A house built in 1960 with the same or similar layout as one built-in 2010 house may not yield the same comps because newer homes tend to have a higher value.

  • Square Footage

The value of a home with four bedrooms and two bathrooms is not the same as one with three bedrooms and two bathrooms. Having one extra bedroom could mean a $100,000 price difference. In determining a property’s worth, square footage is vital because it determines the house’s total size.

  • Target Dates

To accurately estimate the house’s worth, it’s essential to focus on recent sales activity in the neighborhood. Comparing one home to one that’s recently sold will give you a better idea of how accurate your valuation is. To save money, look for houses that have been sold in the last six months.

Quick Guide in Using House Comps

Finding out what you have is one task. It’s also important to understand how to interpret the comp data and apply it when making real estate decisions. People typically choose to work with real estate brokers for this purpose. Also, remember the essentials:

  • Consider the Season: Due to heightened demand, a house listed in the spring will likely have more buyers.
  • Visit the Comparable Home to Get a True Picture: Pictures will rarely do the property justice. If you get the chance, look at the house you’re thinking of
  • Only Look at Sold Homes: Just because a house is for sale doesn’t mean it’s worth what it’s advertised for.

Final Thoughts

It’s vital to evaluate real estate comps free whether you’re considering buying or selling a property. You’ll find that your home search will be easier once you know how to look for and interpret real estate comps.