Few things in real estate are constant. Home prices fluctuate, the market shifts, mortgage rates change, making it difficult to say exactly how much your home is worth at any given time. Whether you’re considering selling in the future or you’re just curious how much equity you’ve built in your home, knowing how much your home is worth is valuable information to a homeowner.
How much your home is worth, like all things, really boils down to how much somebody is willing to pay for it. But to come up with a good estimate, you need to look at comps, or comparable home sales, to estimate the home value's value. The best way to get comps is to find a real estate agent but you can also find comparable sales on your own by searching online for recently sales that similar to yours.
Real estate comparables - also commonly referred to as “comps” for short - are similar properties that were sold in the specific area you’re looking to buy or sell a home. (For homeowners, comps are generally drawn from similar homes in the same neighborhood.) The home you're looking to sell or buy is considered the subject property; the comps are recent sales in the area.
Comps can help you figure out a home’s fair market value, or how much it would sell for based on current market conditions. A comparable property should share similar location, square footage, bedrooms and bathrooms, and amenities, like garages or outdoor space, as the subject property. Sometimes, you can’t find perfect comparisons, but if you can use the sold prices of similar homes to find a baseline and then make adjustments. For instance, if a comp in your neighborhood only had a one-car garage and you have a two-car garage, your home may sell for a few thousand more.
You should only consider recently sold homes as comps. Active listings aren’t a fair comp for your home because they haven’t sold — the fact that they haven’t may suggest that the price is out of touch with the market. Homes sold within the last 60 days are best used as comps.
Homebuyers, sellers, real estate agents, appraisers, and lenders can all benefit from understanding comparable home sales to better understand a property's value. One of the biggest benefit of using comps is to help set a listing price for your home. Here are a few other ways that recent home sales are used:
The most important reason that these groups all use these factors is that if a home fails to appraise appropriately, a lender may not approve a mortgage for a buyer, causing the sale to fall through.
For both buyers and sellers, pulling comps is an important step to making an informed financial decision. For sellers, good comps help them find the right price at which to put their house on the market to find a buyer quickly. For buyers, comps help them figure out what they can afford on their budget.
Here’s how to find real estate comps.
The simplest way to get an accurate comps is to consult a real estate agent who will conduct a Comparative Market Analysis (CMA). This process isn’t a formal appraisal but it uses in the Multiple-Listing Service (MLS) to draw the most current information possible about home sales and listing in the area. An agent will have access to more home sale data than you and, as such, can formulate a more accurate assessment of your home’s value based on comparables. This could make you feel beholden to working with an agent and might cost you money upfront - but it will be worth it. Additionally, most agents won’t charge a fee for a real estate CMA if you’re hiring them to list your home or buy a new one.
As such, if you don’t want to start working with an agent, the internet is a magical thing. Sites like Redfin, Realtor, and Zillow have tools that make finding comparable homes very easy. It’s important to note, however, that these comps won’t be as accurate as a more formal CMA from an agent.
If you’d like to gather more information and take a deeper dive, you can also look at county record sites and other publicly available information concerning property records.
If you decide to do look for house comps on your own, you need to keep some things in mind and keep your emotions out of it. The most important thing to remember: only use recently sold homes for comps. We can’t stress enough to ignore homes that are currently for sale, pending, under contract, or sold more than six months ago. That's because housing market conditions and changes can lead to dramatic sales ranges.
For example homeowners may undercut their asking price because they have personal circumstances that require them need to sell their home faster, while others may have accidentally overpriced a home only to end up selling for much lower. Recent, closed sales, which better show the final sales prices and thus the fair market value of a home, are the only ones to factor into your analysis.
You shouldn’t compare a single-family home to townhouses or condos, or vice versa. They might be in the same neighborhood and measure in at about the same size, but they’re just not the same and you can’t compare them as such.
In the same vein, make sure you look closely at photos of the homes you want to use as comps. Make note of finishes, appliances, fixtures, flooring, and the overall condition of the home. Of course, they don’t need to be identical, but even small discrepancies like new granite countertops or fresh interior paint can begin to add up. The listing description will also note upgrades or improvements that might not be visible in the pictures. Gather all the information you can from the information available on a listing to make sure a home passes the first test of being a good comp.
Once you think you've found a comparable home, you should go see it in person. Since comps should always be in your area, so it shouldn’t require more than a short walk or very short drive. Seeing it in person will help you better understand the condition of the home’s exterior features, like the siding, roof, and driveway.
You’ll also get familiar with the nuances of a home’s location. Does it abut railroad tracks? Is it on a cul-de-sac rather than the street?
Take careful notes about potential comps because once these similar homes sell, you might lose digital access to photos and descriptions if the listing is deleted.
After you’ve researched and considered your comps, compare the prices with data and property records available online. Adjust your price based on the factors we mentioned in the previous section, but do so sparingly. An extra parking space in the garage doesn’t mean you should tack an extra $100,000 onto your home. It’s next to impossible to pinpoint an exact price on every little difference, so you should stay conservative with price adjustments. That extra garage space? Maybe call it another $3,000.
If you’re planning on selling soon, you should also adjust your price based on seasonality. The real estate market is hottest in summer and coldest in winter, so you may be able to net a higher price in the summer when there are more buyers. Likewise, you might have to entice winter shoppers with a lower price.
Finally, when you’re ready to put your home on the market, hire an appraiser to give you an unbiased appraisal of your home’s value. An appraisal usually costs between $400 to $500 but will give you the most accurate assessment available. They’ll also provide suggestions to increase your home’s value in case you want to put that money in now to get a better offer for your home later.
You’ll almost always have to get an appraisal before closing on a home sale, so this isn’t essential to do before putting your home on the market, but it can be useful to know ahead of time.
Another way to find out how much your home is worth is to use a home value estimator. You can get a free estimate from Orchard - our valuations are more 30% accurate than the rest.
Here are some more details about comps in real estate and what they mean for you.
"Comps" is short for "comparables" and refers to similar properties that have recently sold in the same area as the property being evaluated. Real estate agents and appraisers use comps to help determine the value of a property.
When choosing comps, real estate agents and appraisers typically look for properties that are similar in size, location, age, and condition to the property being evaluated. They may also consider factors such as the number of bedrooms and bathrooms, the size of the lot, and any upgrades or renovations that have been made.
Comps can be a useful tool in determining a property's value, but they are not always 100% accurate. Factors such as differences in condition, upgrades, and location can all affect a property's value. It's important to work with a qualified real estate agent or appraiser to ensure that comps are used appropriately and that all relevant factors are taken into account. (Use our home value estimator to find out how much your home is worth; we're 40% more accurate than others.)
Yes, you can use comps to help determine the asking price for your home. By looking at the sale prices of comparable properties in your area, you can get a better idea of what buyers are willing to pay. However, it's important to keep in mind that your home may have unique features or circumstances that could affect its value, so it's best to work with a real estate agent to determine the most appropriate asking price for your home.
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