When buying a home, it’s important to get a thorough understanding of the property’s fair market value.
Real estate trends and statistics are constantly fluctuating based on the health of the economy, specific events, available inventory, and/or the level of volatility in the marketplace. These trends will ultimately be reflected in sale prices and home values.
Examining comparable homes in the neighborhood will help you gauge a property’s value, therefore giving you the insight needed to make a competitive offer.
What are comps in real estate?
Comps, or real estate comparables, are nearby properties with similar characteristics to the home you’re interested in.
They can be used to estimate a property’s value by looking at recent sale prices of comparable homes, also known as “comps.” The real estate comps method is most accurate when the properties being compared are as similar as possible to the subject property.
Factors that will affect a property’s value include:
- Number of bedrooms and bathrooms
- Special features or amenities (e.g., swimming pool, finished basement)
- Condition of the property
How to figure out comps on a homes?
In order to get an accurate estimate of a property’s value, you’ll need to find comparable homes in the same neighborhood that have recently sold.
The best way to do this is by working with a real estate agent who can pull data from the Multiple Listing Service (MLS). This database includes all homes that have been listed for sale by real estate agents in a given area.
Your agent will be able to narrow down the search by applying certain filters, such as:
- Property type
- Price range
- Special features or amenities
Once you have a list of comps, you can start to get an idea of what the property is worth.
How to look up real estate comparables?
You can also use online tools like Zillow’s “Make Me Move” feature to find real estate comps. This tool allows you to see recent sales data for similar homes in the area.
You can also use the “Comps” tab on a property’s listing page to find real estate comps. Simply enter a property’s address and you’ll be able to see a list of nearby homes that have recently sold.
By looking at real estate comps, you can get a better understanding of a property’s value and make sure you’re not overpaying for your home.
Adjustments for Value of Real Estate in Comps and Appraisals
Once you’ve found comparable properties, you’ll need to make adjustments for any differences in order to get an accurate estimate of the subject property’s value.
For example, if the comparable properties are smaller than the subject property, you’ll need to adjust for that difference. The same goes for any other differences, such as location, age, condition, etc.
Keep in mind that these adjustments are only estimates; there is no perfect way to adjust for every single difference. It’s important to use your best judgement and consult with a real estate agent or appraiser if you’re unsure about how to make an adjustment.
By following these steps, you can get a good estimate of a property’s value by looking at real estate comps.