Hello from Las Vegas, everyone!
If you’ve ever heard someone say “let me check your comps” or “I’ll send you some comps” and you have NO idea what that means, you’re in the right place. Today we’ll talk about:
1. What’s a comp?
2. How you find a comp
3. What it means you as a seller or a buyer
When one house is compared to another house, it’s known as a “comp,” short for “comparable.”
Realtors as well as professional appraisers will compare your home to others, but the motive is different. REALTORS are determining market value whereas the appraiser’s primary purpose is to ensure that the lender isn’t loaning you more than the home is worth. A REALTOR prepares comps for you as a complimentary service (that means free). You might have heard it referred to as a “Comparative Market Analysis”, also known as a CMA.
Now what is market value? It’s simply the amount for which something can be sold for on a given market… and for our purposes, it’s how much a house is worth on today’s market.
So, with that said, how do we know what a buyer might pay for YOUR HOUSE? We can help determine that by looking at what buyers have paid for similar comparable homes… known as looking at the comps.
The condition of your home will carry a lot of weight when we’re working on your comps.
First, we’ll determine if there are any general maintenance issues with your home (like carpeting that needs to be replaced, broken doors, or damages to the wall as examples) then, we’ll deduct or add value if comparable homes are in worse or better condition than yours. Certain factors like number of garages or special upgrades like a pool will also be compared and we’ll adjust the values of the comps if needed when we prepare that information for you.
Typically, we’ll look back no more than six months for sold homes, similar in age, style and size, within a one-mile radius of yours. Yes, there are times we need to look further back in history or extend the search area, but not often.
It’s also important to look into the details of the homes that sold.
For example, if an identical home has sold in your neighborhood for a drastically lower price – there might have been a special negotiation or particular issue with that home that we will take into consideration while preparing your comps.
If you’re a seller, understanding your comps will help you anticipate what your home can realistically be sold for, so your home is listed at the right price – not underpriced, and not overpriced so it ends up sitting on the market.
If you’re a buyer, you’ll receive comps before you make an offer on a home. This will help you understand recent activity in that area and whether or not the offer you’re about to make on a home is aligned with the market. By taking the time to review the comps, you can make a confident and competitive offer.
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