The Science of “Comps” – from American Dream Realty
Whether you’re on the inside of the real estate market as a professional, or you currently house hunting or in the midst of the closing process, it’s a good bet you’ve heard the term “comps”, or, “comparables”. Essentially, this term refers to homes which are geographically located in the same area, and are also close in size, living features and the state they are currently in as the property you are attempting to buy, sell, or will be buying or selling.
A buyer would check out the comps in the area when they’re figuring out what to offer on a home they wish to purchase. Conversely, sellers would use the same comparable data when figuring out how exactly to price a home in a current market state.
Because, just like many other things, all comps are not created equal, it’s a good idea to have a plan of attack when sitting down to analyze comps.
But, what is most important on the ‘food chain’ of comparables? Our American Dream Team lists them for you here:
Location, location, location: Because the real estate market is based on location, the best approach to take is to use similar homes in your neighborhood whenever possible. If this just isn’t feasible, attempt to at least stay within your school district as a good measure.
Time is always of the essence: If you’re able to come across sales that are currently “pending”, you’re in luck as they are the best to use in terms of what is called “live market data”. This transaction, in terms of price, reflects the most current pricing stats available. As a rule of thumb, try to stick within a three-month time span.
Home features and amenities: Once the aforementioned factors are checked off, the next step is to find homes in your target neighborhood that have similar features – square footage, bedrooms and bathrooms, garages or basement space, brand-new kitchens, and the like.
Try not to overthink the comps: If you can find an experienced, trustworthy local agent – such as our bevy of agents we have here at American Dream, they will work to keep your from over-analyzing comps. They are expertson the smaller nuances and can help you to make the most informed decision from whatever side of a potential transaction you’re sitting on.
Our team is at the ready to serve you,call us here at American Dream today!
