What are comps, and how do you pick the best ones?
First things first: A comp, or comparable, is a recently sold home that is reasonably similar to your home in location, size, condition and features.
Comps are reviewed by sellers and buyers, and are used by real estate agents to create a comparative market analysis (CMA) which helps determine a listing price for your home. Comps are also used by appraisers to establish the fair market price for lenders.
So selecting your home’s “comps” is a critical step in figuring out how much to ask. You can use your knowledge of your area to improve your comps by removing suggested homes based on two things:
Location: Is the street traffic better or worse than what you experience? Is your view similar? Are you closer to amenities? Condition: Is the home’s appearance more or less appealing than yours? How’s the yard?
Armed with your selections and local market conditions, we can can provide you with a private estimate of what your home price could be.
You can also find your own candidates by searching for recent sales. You want to look at sales from the past 3 to 6 months. In this first stage, you’re looking for homes that are nearby and similar in terms of square footage, bedrooms and bathrooms and lot size.
Of course, a home’s value is based on more than just its size. Take a drive or a stroll to see their condition and location. A home with a yard that backs up to a greenbelt will be worth more than one with train tracks behind it. These are factors you don’t always see online.
And remember to consider schools. Make sure you are comparing homes that will feed into the same schools as yours or at least the same school and taxing districts.
Scope out the competition
Look at what’s for sale around you. Unlike recently sold comps, you’ll have a chance to tour for-sale homes whenever there is an open house. Check out the condition inside and scope out the upgrades to see if they compare with yours. Look at the layout and flow. If your home space is very chopped up, it’s probably worth less than a similarly sized home with good flow.
Also look at how long they’ve been on the market. If a home very similar to yours has been listed for months while others are being sold in days or weeks, they’re probably asking too much. Don’t make that mistake yourself.
Ask your agent
You may not be able to get into recently sold homes to look around but chances are your agent did. Same with for-sale homes that aren’t offering an open house. We will be able to tell you why a particular home is or isn’t a good comp for you based on our first-hand knowledge.
Be armed with comps
Even once you’ve picked a price and put your home on the market, your comps can be helpful. Potential buyers may want you to justify your price if it’s higher than other homes in the area. They may come at you with their own comps that indicate your home should sell for less.
If you’ve done your homework and have good, solid comps in hand, you can show them exactly how you reached your price and why it’s fair.