Real Estate Comps: What They Are And How To Find Them In Your Area

When buying or selling a home, pricing is relative. How much should you pay when buying? How much should you ask for when selling? What’s the actual value of a home?

The answers all depend on a number of factors that vary based on location, time of year, real estate market trends and – most importantly – real estate comps.

What Are Comps In Real Estate?

Real estate comparables – or “comps” – are comparable properties in a specific location you want to buy or sell in. You can use comps to determine the value of a home by comparing it to similar properties sold in the same neighborhood or somewhere else near the house being valued.

For example, if you’re thinking of selling a three-bedroom, two-bathroom house with 1,500 square feet of living space, finding homes with similar characteristics in the same general area is a good way to start estimating your property’s value.

How Do Comparables Work In Real Estate?

If you’re looking to buy and don’t want to overpay, finding good comps in the area can help you understand the home’s worth before making an offer. Real estate comps are all about determining value, which can be useful for different purposes across the various facets of real estate – from buying and selling to investing and making housing market predictions.

Who Uses Real Estate Comparables?

Real estate comps can benefit real estate professionals as well as those who are house hunting. Depending on your job and your home-buying goals, comparable sales can provide invaluable insights that help you make the best decision about where to live. The following parties all use house comps in different ways.

Home Buyers

Comps are a great resource for buying a house. They can provide knowledge for house hunters who believe they’ve found the home of their dreams. Once you’ve zeroed in on a property you want to buy, researching similar properties in the area can help verify that the listing price is fair. This information can help you fine-tune your initial offer amount – and can guide your strategy when negotiating a final asking price.

Home Sellers

Real estate comps provide a few critical insights for selling your home. Understanding the sales price of similar homes in the area will help you decide how to price your home. Another, perhaps less obvious, key benefit of house comps is that they provide clues on which selling points to highlight when you list your house for sale.

Appraisers

One of the most important steps to completing the sale of a home is the appraisal. This process calls on a professional appraiser to assess the value of the home. During a home appraisal, an appraiser relies on comps and several other factors to determine an accurate value of a property. This can make or break a transaction, so it’s one of the most important processes that real estate comps are used to inform.

Real Estate Agents

Real estate agents use the MLS (multiple listing service) to pull real estate comps, which then play a role in running a comparative market analysis. This allows agents to give the best advice possible to their clients, whether those clients are buying or selling property.

How To Find A House’s Real Estate Comps

Whether you’re buying or selling a house, pulling house comps is a critical step toward making the right financial decision. You can go about doing this in various ways – some of which are more accurate than others.

Use Real Estate Websites

If you don’t yet have a real estate agent, a quick Web search can give you the information you need to make your comparisons. Websites such as Rocket Homes^SM have search tools that can make finding home values and recent sales prices quick and easy.

Scan Public Property Records

Want to take a deeper dive? County record sites can provide an even more in-depth look at the characteristics and sales prices of specific properties and area trends. If public property records aren’t available online, you can visit your county assessor’s office in person to request these documents.

This can be a more time-consuming process, and information may be limited or outdated. Requesting records from the last 6 months can help you pull the most relevant data for the most accurate comps. Plus, these records won’t reflect information such as seller concessions. Factoring in these seller-paid fees will more accurately reflect the amount the buyer paid for a property.

Work With A Real Estate Agent To Pull MLS Comps

The MLS provides the most up-to-date and easy-to-access information for pulling comps, but it’s restricted to licensed real estate agents and appraisers. To access this database, you’ll have to enlist the services of a real estate agent.

Working with an agent means easy access to a professional who’s adept at running and interpreting comps. This is especially useful if you’re interested in buying a unique property that may be hard to find comparables for.

Factors Impacting Comparables In Real Estate

Whether you’re a real estate professional, an eager home buyer or a seller pulling comps, you’ll want to keep some of a property’s key features in mind.

Location

You may have heard the old real estate adage that goes like this: “location, location, location.” Well, it’s an old adage because it’s pretty accurate. A 500-square-foot apartment in parts of New York City can be 10 times as expensive as a 5,000-square-foot house in the middle of the country. The differences aren’t always quite that stark, but you no doubt get the idea.

Typically, optimal comps are no further than one mile from the property, but the exact distance will depend on your area (rural, suburban, urban, etc.).

Condition

How well-built and well-maintained a home can be critical to the home’s comparable value. For instance, you might find a significant price difference between a home with a leaking roof and a home with a brand-new roof. When running comps, be sure to take into account the condition of all parts of the homes you’re comparing.

Age

A home’s age will have a major impact on its value and influence other factors that affect real estate comps – especially a home’s condition. New homes tend to have higher value, so a home built in 1980 and one built in 2015 may not have similar values just because they feature the same number of bathrooms and bedrooms.

Number Of Rooms

A four-bed, two-bath house may seem like a pretty close comp for a three-bed, two-bath home, but that’s not necessarily true. That extra bedroom can often mean a price difference of $100,000 or more. Don’t forget to factor in size, too, since square footage can significantly impact home value.

Lot Size

Acreage value varies by location but, all other factors being equal, more land means more value. Even if the houses are pretty comparable, if one sits on two acres and the other sits on 10 acres, you need to note this when determining the value of both properties. This is especially true for location. A large lot near a popular urban center could be significantly more valuable than a rural plot of land the same size.

Time Frame

When looking at recent sales in the area to determine the value of the home, recency is a pivotal consideration. Comparing your potential home to a house that sold a month ago is going to be much more accurate than looking at one that sold 2 years ago. Your best bet is to find homes that have sold within the last 6 months.

Additional Tips For Finding Real Estate Comparables

Now that you’re familiar with the most common ways to find real estate comps, it’s a good idea to keep the following suggestions in mind when implementing these strategies:

• Visit homes in person. If you’re nearby, it can be extremely helpful to drive by and view the exterior of comparable homes you’re evaluating. An inside tour of the house or surrounding homes may not be possible, but it can help you determine an even more accurate market value.
• Limit comps to similar property types. Be cautious when looking at two property types. For example, comparing a single-family home to a condo or a multifamily rental property can be difficult. Try to limit your comps to the same type of property and a property with similar characteristics.
• Find more than one comparable property. It’s best to use three to five comps when determining a home’s value. And, the more sources you use for comps, the more accurate the comps will be. If multiple sources estimate a particular comp at a similar value, you can safely assume that value is correct.

The Bottom Line: Comparables In Real Estate Serve An Important Purpose

Real estate comps are key to making the best decision when you’re thinking of buying or selling a home. When you know what to look for and how to interpret it, you’ll be well on your way to making wise choices as you navigate your home search.

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