Have you heard a real estate agent use the word “comps” and wondered what they meant?
Understanding a real estate comp will probably be foreign if you are not in the industry.
Comps in real estate are comparable sales. Real Estate comps are used to compare and determine the fair market value of a property.
Without appropriate comparisons, determining a home’s value is far more challenging.
Real estate agents and appraisers use comparable sales to assist buyers and sellers in understanding market values.
A comparable market analysis used by agents and an appraisal used by appraisers will contain comps to analyze value.
Comparables or comps are the terms used for similar homes recently sold to help find the best listing price when selling properties.
Buyer’s agents also use comparables to determine a fair offer on a property.
The listing price should encourage buyer interest, reducing the time it takes to sell the home. But finding the right price isn’t easy, and making a mistake can cost you time and money.
As a real estate agent working on analyzing value, finding the right comparable sales can make or break the property’s correct price.
House pricing will be incorrect when the proper real estate comp or comps are not selected.
The data should be apples to apples, not apples to oranges. Comparables must also be interpreted correctly, or that will cause improper home pricing.
One of the most significant weaknesses among many real estate agents is pricing a home accurately.
You can see this on full display with the daily price reductions nationwide.
Unfortunately, adjusting for value among real estate comps can be challenging without years of experience.
Analysis of comparable sales is a skill and art.
Let’s look at the process real estate professionals use to price homes and how to find them.
What Are Real Estate Comps?
In real estate, comps are similar homes in your area that have sold relatively recently- that is the most straightforward definition. The more the comparable properties share in common with the seller’s house, the better. Real estate agents refer to these as “sold comps.”
Comparables are particularly useful to sellers who are going the FSBO route. FSBO sellers won’t have the help of a real estate agent to find sales data and assess the best price to market their homes.
Buyers can also benefit from comparable sales data. They can help the buyer decide how much to offer for the home they like. The comparables should help ensure they don’t pay more than they should.
When an appraiser is used, they will find comparables to help them assess the home’s value. Typically, the buyer’s lender requires an appraisal to ensure the buyer hasn’t offered more than the home is worth.
Occasionally, sellers use the services of an appraiser to price their homes appropriately.
Licensed Realtors and agents use the multiple listing service, or MLS, to find comparable homes. When they complete a comparative market analysis or CMA, they will check what other homes in the area were sold for.
The MLS can help real estate agents stay informed about local market trends and find the best selling price for their clients. The data can be used for residential and commercial properties.
Interesting Facts
1. Real estate comps, short for “comparables,” are used to determine the value of a property based on similar recent sales in the area.
2. They are typically collected from public records, multiple listing services (MLS), and real estate websites.
3. Comps for real estate help buyers and sellers understand the current market conditions and determine a fair price for a property.
4. Property features such as location, size, amenities, and condition are considered when comparing housing.
5. The age of the sold properties should ideally be within six months to provide accurate comparability.
6. Brokers, real estate agents, and appraisers often use comparables (comps) to provide professional advice on a property’s value.
7. Mortgage lenders rely on appraisers to assess a property’s value before granting a mortgage to homebuyers.
8. Online platforms and apps have made it easier for users to access real estate comps quickly and conveniently.
9. Housing market fluctuations can significantly impact accuracy of data.
10. Comparable sales can be beneficial when determining list prices for properties not yet on the market.
11. When using data points for valuation purposes, comparing similar properties in size, location, condition, and other relevant factors is crucial.
Types of Comps For Real Estate
When analyzing value, a few categories of comparables can be looked at. Housing market data can include the following:
- Home sales
- Pending sales
- Contingent sales
- Current homes for sale
- Expired listings
- Withdrawn properties
The most vital information when looking at comparables is what’s been sold. With sold properties, you know what someone would pay for a similar property. Sold properties are the most valuable type of real estate comp.
The next most important is pending home sales.
The only problem with pending sales is that a real estate agent does not know what the deal will close at until it does. If the property sold quickly, you could make an educated guess. It probably went close to asking or maybe more.
Homes for sale are the least crucial data point. Although looking at what your competition is priced at is helpful, you never want to hang your hat on what another homeowner thinks their property is worth.
Expired and withdrawn homes can offer valuable data points because they show home sellers that failed to sell. Real Estate agents need to focus on comparable home sales.
Sold properties are the most valid comps.
How to Find Comparable Sales Data?
Finding appropriate comparisons is the most crucial task when determining market values.
When selling your home, you have several options for finding comparable sales to price it accurately.
If you are using a real estate agent’s services, they will check the Multiple Listing Service (MLS) to find comparables. The database has everything needed to perform an accurate analysis.
Real Estate agents refer to this as “running comps.” It is one of the first steps in helping home buyers and sellers determine market value.
If you are using an experienced Realtor, they should have no trouble finding accurate data and will likely have a good understanding of the market in your area.
Real Estate Agents Create a Comparative Market Analysis (CMA)
Usually, real estate agents provide homeowners with a comparative market analysis (CMA) to encourage them to sell their homes through their brokerage.
They will do this for free to promote their business, but it will be valuable information if you consider selling your home.
Real Estate agents will put all the comparables together in a report that should be easy to understand, even for a layperson.
Sold properties, pending sales, and current homes for sale are the most common comparable sales data in a market evaluation. The analysis will include statistics and current market conditions for a specific time frame – usually no more than six months.
The report will show similarities and differences between the most appropriate comparable properties.
How to Find Comps Without MLS Information
Occasionally, someone will ask me where to find comps for my house. Usually, they are not looking to sell their home but rather to appeal their property tax.
They are looking for supporting comparable sales data to give to the local assessor when they don’t like their property tax assessment.
There are still some options if you are looking for comparable sales data without a real estate agent’s help and access to the MLS.
Public records, including the county where the home is located, should keep property sales records and contain information about sale prices.
You might get lucky and find this information online, but otherwise, you must visit the courthouse.
The information in these records won’t tell the whole story, however. If the seller agreed to reduce the price to account for required repairs, you would only see that price.
The original asking price isn’t included, which could leave you with a distorted picture of the market.
You can also check online marketplaces and search for sold prices based on ZIP code. Sites like Zillow or Trulia should let you filter recently sold homes and could even have a pricing feature to find the data needed. Finding accurate comparables without an agent’s services can be challenging.
Let’s look at the sites where you can look for comparables.
How to Get Free Comps
It is certainly possible if you are wondering how to get real estate comps without a Realtor.
Searching for comparable real estate sales is possible when you can’t access MLS. It’s just a bit more challenging.
Quite a few sites will pull data from the multiple listing service. They include the following sites:
Use Zillow to Find a Comparable Sales Info
Zillow is the most visited site for real estate searches. It is an excellent starting point for searching for comparable sales for a house or condo. The site allows you to compare properties by type, price, bedrooms, bathrooms, and other features.
Zillow will be the best place to find much of what you want.
Use Trulia For Market Data
Trulia also allows you to search for comps based on the information you’ll need, such as the type of property, sold price, sold date, and other search parameters.
They also have an excellent mapping feature for finding properties in nearby neighborhoods.
Try Redfin to Get Your Needed Info
Another helpful site for searching for comparables is Redfin, which has information on homes sold within the last three years.
Other sites that may assist in your search for comparables are Realtor.com and RE/MAX.com. These sites have excellent real estate data and are some of the most visited for real estate searches.
Searching for comps or comparables is so much easier when you have a real estate professional assisting you.Click To TweetHow Do Appraisers Find House Comps?
An appraiser typically has access to multiple listing services to research comparables. Real estate agents can also help appraisers by providing the comparable sales data they used to establish a home’s market value.
Once an appraiser has established the resources they plan on using, the knowledge will be put into what is referred to as the Uniform Residential Appraisal Report. Statistical information and facts about the appraised subject property and the sold house comps will be available.
Real Estate Appraisers will examine numerous data points to determine market value. They will adjust from home to home based on those properties’ characteristics compared to the appraised subject.
Numerous factors will determine an appraised value. They will consider each element when projecting a probable sale price.
The seller’s listing agent should provide the appraiser with any information on the comparables that the appraiser may not be aware of.
One advantage real estate agents have over an appraiser is they visit far more homes. Great agents can point out data points about comparables to an appraiser that could influence the final appraisal value.
Homes appraising for at least the purchase price is one of the standard contingencies in real estate contracts, so it behooves an agent to assist the appraiser where necessary.
Things to Remember When Finding Comps
Understanding how to use comparable sales is crucial. When you try to find sales data, you want to see at least three properties.
These homes need to be similar in the following ways:
Location
The comparables need to be as near as possible to the subject property. Comps in the same neighborhood should be given more weight.
Location Features
The closer the similar homes are, the more likely they will benefit from the same amenities. This can be things like walkability, views, and shopping opportunities.
Size of The Properties is Crucial
The homes should be similar in size. Try to stay within 300 square feet. A more considerable home size disparity can skew a comparable sale. The square footage of a home is one of the most vital criteria for a property’s value.
Bedroom Count
When running comps, the number of bedrooms must be the same. If they’re different, you’ll need to make a comparables adjustment.
Bathroom Count
The number of bathrooms also plays a crucial role in determining value and marketability. Many buyers want more than one bathroom and will pay extra for it.
Conversely, they often want to pay less when more bathrooms are needed. There is a direct connection between a higher sales price and more baths.
Age of The Property
Properties built at a similar time are better since they will likely be in a similar condition and have common characteristics.
Comp adjustments are made for renovated properties or homes with a new addition.
Condition
When extensive work is required, the value is adjusted downward, and the sale price will often be less. For example, if a new roof is needed. On the other hand, when there are many upgrades, the value will be adjusted upward.
The Sale Date of The Properties
The property should have sold in the last six months. But it would be better if the sale was in the previous few months. Comparable sales data is more accurate when fresher.
Square Foot Pricing
The price per square foot can help show comparable homes. However, price per square foot is not the be-all and end-all of home pricing.
Never use this as a stand-alone method of determining real estate market value. Doing so is a surefire way to be inaccurate.
Appraisers Must Bracket Comps
One vital point to understand about comparables is that real estate appraisers must bracket comps. This means that the appraiser must include one real estate comp that is better than the subject and one that is not.
This is known as bracketing. An example would be having one larger home with more amenities and another inferior to the subject.
Finding the Most Accurate Comparables is Crucial
Finding identical homes will not be easy under most circumstances. Aside from situations where your home is part of a recently constructed development, finding two or more identical properties is typically impossible.
To find homes that directly compare to yours, you must look at the properties’ details without letting your emotions cloud your view.
It’s effortless to want to believe your home is better and worth more than other properties, but you need to ignore this bias.
Let’s review tips to help you find the most accurate comps. Again, it would help if you kept in mind that comparables are similar to yours, not exact.
Sold Prices Matter Most
Homes currently being marketed aren’t going to help. Since the seller could have overpriced their property, these homes could provide inaccurate data.
The home could also be priced too low if the sellers are looking for a quick sale or multiple offers. It is vital to remember that the asking price for a home can change at a moment’s notice.
One seller’s opinion of value does not translate to the value of your property.
Only when the home closes can you genuinely establish the value of that property. It may not be for the seller’s desired amount if it hasn’t sold yet.
Check The Photos to Help Establish Value
Listings should have plenty of photos to check if the home looks similar to yours.
Is the finish of the home like yours? Are the appliances of similar quality? Do the comps have new kitchens and baths that could account for a higher value than your home?
The more of these comparable details different from your home, the less likely the property will be a good comparison.
Checking The Description For Comparables
The details provided in the listing should help you confirm if many of the features match your property.
For example, it might mention if the HVAC system has been replaced recently, which could increase its value compared to your home.
If you have made renovations, do the similar homes you find have renovations too?
Well-written home descriptions help sell a home and assist real estate agents and appraisers prepare their comparable properties.
Only Look at the Same Type of Home When Preparing Data
If you own a townhouse, don’t check single-family homes or multi-families.
Your comparable properties must be as similar as possible, so only look for the same type of home.
Trying to compare a ranch to a colonial is foolish. Remember that your comparables must be stylistically in the same family to be valid real estate comp.
If a real estate agent presents you with data for your house all over the map in terms of style, the value provided will probably be inaccurate.
Visiting The Property Helps Determine Comparables
If you can pass by to check the home, you should. Walking or driving to the house should reveal whether its condition is the same as yours. Though you will only see the home’s exterior, it should help you assess its situation.
As mentioned, real estate agents have an advantage over consumers and appraisers because they can get inside far more homes.
Seeing the nuances of a home can help your judgment in determining a home’s value.
Location is a Powerful Factor
The location of the home is essential. Is the house in a cul-de-sac? Is it in a good school district?
Perhaps it is close to transportation or major highways. Details like these can make significant differences, and they add up. The distance from the subject property is an essential metric when finding comps. You’ll want the radius as close as possible.
The further distance separating houses, the more likely adjustments are needed.
Regarding comparables, location is one of the most potent factors in determining a property value.
Making Notes on Your Sales Data
When you are doing this research, remember to take some notes. If you don’t, you can get confused when comparing properties.
Also, save photos and listing descriptions, as they can be taken down from the website without notice.
What if There Are No Appropriate Comps?
Now and then, you will run into a unique property for which there isn’t similar sales data. When this happens, to find accurate comparables, you can leave the geographic area to find similar properties.
Sometimes, this means going to an abutting city or town. While doing so is not ideal, you must find some similar homes for the correct market value.
When looking for comparables outside the home’s location, you must adjust for location. For example, if the subject property is in a more desirable city or town, the houses in other towns must be adjusted to reflect the subject property’s superior location.
Comps in real estate can get far more tricky when you have to leave the area.
Don’t Use Zillow to Decide on Your Price
After gathering enough good comparison information, you can decide how much to market your home for.
Using data from different sources like the MLS, online marketplaces, and public records should give you enough information to choose the right price point.
Once you have a figure, compare it to online estimation tools. Just be leery. Zillow has its Zestimate tool that you can use to see how it compares to your conclusion.
Though they report an error rate of between 4 and 5 percent, who would want to be off that much? This tool’s accuracy depends on the data available, so it is unlikely to give an accurate result if there isn’t much.
It would be best never to use Zillow home values to determine your home’s worth. Values can be off by tens of thousands of dollars. Sometimes hundreds of thousands of dollars!
Seasonality Can Impact Home Prices
When considering your price range, you must also look at the time of year the houses were sold.
Typically, homes sell for more in the spring and early summer, though this can depend on the local market.
If your comp sold in the winter, the seller could have discounted the price to ensure a sale.
If you can’t find great sales data, don’t just guess at the best price.
Many different things make up the price of a home, and if you can’t find good comparative homes, you could be making a big mistake in your pricing.
Get Help From a Professional to Find Comps
Some people will head to Google and search real estate comps near me. This usually isn’t the best method for finding an appropriate real estate comp nearby.
You can always hire an appraiser if you are having difficulty or aren’t confident with your price. While this could cost around $500, it will be worth it if it helps you avoid selling your home for less than its value.
Real Estate agents will likely provide free real estate comps in hopes of doing business with you at some point.
Having suitable comparables can make all the difference when establishing current market value.
Comparables to your home can easily be found when hiring an appraiser or Realtor.
Noteworthy Statistics on Comparisons
1. Homes located within a 0.5-mile radius of a park see an average increase in value of 11.7%.
2. Approximately 38% of homebuyers are influenced by the proximity of schools when deciding on a property.
3. In neighborhoods with a high Walk Score™, properties sell 16% faster compared to those with a lower Walk Score™.
4. Homes with at least three bedrooms have an average selling price that is 23% higher than two-bedroom homes.
5. Condos in buildings with fitness facilities are typically priced 9% higher than similar units without such amenities.
6. Houses equipped with smart home technology sell for approximately 13% more than those without these features.
7. Real estate transactions involving cash buyers account for approximately 18% of all residential sales in the market.
Frequently Asked Questions (FAQs)
Here are some of the FAQs when it comes to comps and comparables:
1. How Do I Find Real Estate Comparables?
There are three methods for finding comparables: hiring a real estate agent or appraiser, researching online, or searching property records at your local town hall.
2. Are There Specific Guidelines For Selecting Real Estate Comps?
Absolutely! There are indeed specific guidelines that can help ensure accuracy and reliability. The first step is to focus on properties that are similar in terms of location, size, and age. This allows for a more accurate comparison and assessment of value.
Additionally, it is important to consider the recent sales activity in the area to ensure the comps reflect current market conditions. Another guideline is to prioritize properties that have sold within the past six months, as they provide the most up-to-date information.
Lastly, it is crucial to take into account any unique features or upgrades that may affect the value of a property when selecting comps
3. Can You Get Comps From MLS Without a Realtor?
No. To have the ability to access the multiple listing service, you will need to hold a real estate license.
4. Do Comparable Sales Matter?
Yes. Comparable sales are the basis for establishing market value. Running house comps helps a seller determine the correct list price.
A buyer’s agent with accurate data helps buyers understand what they should offer for a specific home they want to purchase.
5. Is Finding Comparable Sales Near Me Important?
Yes. If possible, you should look for comparables close to your home. Nearby homes will typically be given more weight in an appraisal.
Consumers often search online for “comparables near me,” but this usually does not yield correct data.
6. How Far Away Can House Comps Be?
A real estate comp should be as close to the subject property as possible. When your comparables close to the property are not as good as other comps in the same town, they can be used to establish value.
Leaving the town for comparables has to come as a last resort.
7. What Happens if an Appraiser or Real Estate Agent Cannot Find Comps?
When there are no comparable sales within a particular city or town, you can go to another location as a last resort to find the data needed. If there are also no comparable properties in similar cities or towns nearby, you must use the cost approach to approximate market value.
8. How Do Real Estate Investors Analyze Comps to Make Investment Buying Decisions?
Real estate investors comparable sales, to make informed buying decisions by considering various factors. They examine the location of the property and compare it to similar properties in the area. This helps them gauge the market demand and potential for growth.
In addition, investors assess the size, condition, and amenities of the subject property in relation to recent sales. By analyzing these comps, investors can determine a fair market value and negotiate a suitable purchase price.
They also take into account any unique features or upgrades that may affect the property’s value. Overall, analyzing comps allows real estate investors to make data-driven decisions and maximize their return on investment.
Closing Thoughts
A vital part of selling a home is pricing it correctly, and if you aren’t using the services of an experienced real estate agent, you could find it challenging to set the right price.
But hopefully, our tips will help you better understand how to price your home so that it sells for its total value.
By now, you should completely understand comparables related to real estate sales.
Please feel free to reach out if you are in my area and have a home to sell. With my thirty-seven years of experience in real estate, I can provide accurate information about your property.
About the Author: Bill Gassett, a nationally recognized leader in his field, provided the above real estate information on how to find and use real estate comps. Bill has expertise in mortgages, financing, moving, home improvement, and general real estate.
Learn more about Bill Gassett and the publications he has been featured in. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of Metrowest towns for the last 37+ years.
Are you thinking of selling your home? I am passionate about real estate and love sharing my marketing expertise!
I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.
