Do you know what are real estate comparables? How about "comps"? These are slang terms some folks use to talk about similar properties. Setting a price of a home can be confusing to figure out.
Many people, including real estate agents and appraisers, use the Multiple Listing Services or MLS to determine the right price for both the seller and future buyers.
Property values can constantly be changing due to the nature of the local real estate market. Sometimes home values are rising, while at other times they are falling. Occasionally, they will remain rather stable.
No matter what type of real estate market holds at the time, the proper way to analyze the market value is to run comps. Running house comps is a slang term real estate agents use to describe comparable or similar properties.
Researching comparable properties that have been sold has become the gold standard and one of the most respected ways to set any listing price.
If you’re interested in selling a home, it’s going to be handy for you to understand how comps on the MLS can help set the right price for your property. On the other hand, if you're buying a home for the first time, it will also be valuable to understand house comps as well.
Nobody wants to overpay for a property and especially when you are starting with your first house. Whether you are buying or selling a home, it will be essential to grasp how comparables work.
Let's take a look at what you need to know about comps or comparable sales.
Okay, we know that people use real estate comps to help determine a home's cost, but what exactly are they?
A house comp is a property that is like the one you're attempting to buy or sell. These similar homes can help to figure out the actual value of the property in question.
Housing comps or comparables as they are known can be found from the info on the MLS. The multiple listing service (MLS) is a database that holds information on all real estate currently being sold or has sold in the local area.
Real Estate agents can access this information when needed to find matching homes in the neighborhood, allowing them to draw comparisons.
When pulling this information, agents tend to seek out properties similar to their conditions, features, size, and age. It is also ideal if these properties were sold less than 6 months ago at the very maximum—additionally, the closer the comparable property to the subject's location, the better.
When running comps, it is always best to be comparing apples to apples.
MLS comparables are used because sellers can compare data from successful sales in a selected market. The information allows sellers to find properties like their own. Having this information will allow sellers to set the right price for their home when a real estate agent presents the data.
The reason this is even important is that it's vital to pick the right price, which is critical to the success of selling a home.
Regardless of what the property offers in terms of its features or appearance, if a seller can not correctly put the right price, it probably will never sell.
A price should maximize profits as well as not turn off potential buyers away from the property. MLS house comps also provide posting and selling dates, demonstrating the quantity of days properties stay available.
Almost everyone involved in the selling process can utilize MLS comps to help make their lives a whole lot easier.
Although we’ve already touched on why they might be advantageous to sellers and buyers, we want to go over this in a bit more detail as well as outline why other people in the industry can use them; appraisers and real estate agents.
Knowing exactly what you should be looking for when running comps will help you to determine the correct comparable properties to be used. Without having the right comparable sales, your market value is bound to be off.
Here are some things that should be considered:
Understanding comparable sales are one of the most crucial aspects of setting a property's correct list price. Comps are also the basis for determining the ultimate value of a home as well. When you are unsure about the comps, it is always wise to get help from a professional.
Hopefully, you have found the information on comps to be useful.
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Great into to comps Bill!