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Investors should always start by looking at properties that have recently sold. Currently, properties are typically not the most accurate representation of property value on the market, as they could be over or underpriced to sell. It is also smart to drive by the locations of certain properties to get a better idea of the area and surrounding amenities . Investors also need to be careful to study the listing photos presented on the MLS.
In today’s hot market, with some homes selling in just a few days, a six-month window can feel like a lifetime. So you may want to think about looking at only the most recent activity — the past two months, for example — to get a pulse of the market. Set the search to the same neighborhood you live in and to similarly sized homes, as well as the type of property you’re comparing. If you’re selling a condo, for example, search for condominiums, not single-family homes.
Why Use MLS Comps?
If you're the buyer, knowing how to accurately estimate a home's value lets you spot a bargain and keeps you from overpaying. Later on, it helps you gauge your home's equity if you want to borrow against it. Angela Colley writes about real estate and all things renting and moving for Realtor.com. Her work has appeared in outlets including TheStreet, MSN, and Yahoo. “Price per square foot is another excellent tool in pricing,” says Joshua Jarvis, founder of Jarvis Team Realty in Duluth, GA.
This information will help you set the right list price or bid. Start the process of setting a list price with a free home value estimate. HomeLight’s tool uses public data, local sales records, and your home’s last sales price to provide a preliminary range of value in under two minutes.
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Prior to Sundae, Josh was Founding Partner and SVP of Sales at LendingHome, and before that, he was Co-Founder and CFO of Purpose Built Investments. Josh graduated with honors from Stanford with a BA in Economics, BA in Spanish, and an MA in Latin American Studies with a focus in Economic Policy. At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote stricteditorial integrity in each of our posts. What Not to Fix When Selling a House If you're selling your home, you don't have to fix everything.
A comp should be in the same school district, neighborhood and perhaps even the same side of the street. When you’re looking at your comps, make sure they factor inallthe nearby things—good and bad. Try to only focus on homes that have been sold within a 3 to 6 month period. This may be difficult if you have a market that changes rapidly.
Ask a real estate agent for a comparative market analysis
A comparative market analysis includes key information about the property and three to five similar homes in the neighborhood. The report will list crucial features of the homes, including address, square footage, sale price, and descriptions of the floor plans. These reports will also adjust prices based on differences in key features, for example extra rooms or bathrooms. Many real estate agents and real estate brokers use these reports to provide buyers and sellers with crucial market details.
Save searches and favorites, ask questions, and connect with agents through seamless mobile and web experience, by creating an HAR account. Sundae Funding, Inc. offers loans for business purposes only and not for personal, family or household use. Sundae's co-founder and CEO, Josh has a history leading companies that operate at the intersection of real estate and technology.
We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Hosted by expert investor Than Merrill, you'll learn how these time-tested strategies can help you to find success in real estate. Find the price per square foot by dividing the sale price of a property by its square footage and compare that number to your own price per square foot. Many real estate investors have found workarounds to this challenge, mainly through symbiotic relationships with licensed agents.
Pay close attention to other amenities, too, such as whether parking is included. “Banks will use comps to determine the fair market value by hiring a third-party appraisal company for when homeowners refinance a property,” Ameralis adds. And appraisers will also use comps to inform their assessment of what a property is worth.
There’s a lot of information to gather as you start looking for your perfect home. Home and lot size – Many homes are priced per square foot, so finding one of similar size makes for an easier comparison. It’s preferable to find a house within 10% to 20% of your home’s size.
To find comps for a house, you just need to do a little research and some quick math. Follow this guide to confidently estimate what your house is worth in today’s market. Another way to check comps is to use a reputable online home value estimator, also called an automated valuation model tool. These tools pull in market sales data, analyze and compare it to your property, and return a suggested list price. Your home’s comps will depend greatly on your area and real estate market, but by doing research, you can find out the sale prices of similar homes.
Real estate comparables – known as comps for short – are one of the most important tools used to determine how much a home is worth. Price your home too high due to those inflated comps, then it simply might not sell. Your Realtor can drop the listing price—again and again, if necessary—but then buyers might wonder if something’s wrong with the place. Price it too low, and your home will probably get snapped up right away—but you’ll walk away with less than you could have netted. Ideally, when you are looking for real estate comps, smaller distances will provide more accurate representations of homes in your area. Try to narrow your search to about a quarter to half-mile radius from your home.
Having the best house on the block is rarely a good thing (we’ve talked about itbefore), and this is especially true in those up-and-coming areas. You justknow you have what it takes to turn the nabe around, but you might pay for it with a bad comp. If you’re lucky enough to be living in an eerily perfect place that reeks of the 1998 classic “Pleasantville,” you probably won’t run into any trouble.
What if your comps don’t measure up?
To drill down even further, identify other factors that could also impact your home’s value, such as the school district it’s in or its proximity to public transit or parks. NerdWallet strives to keep its information accurate and up to date. This information may be different than what you see when you visit a financial institution, service provider or specific product’s site. All financial products, shopping products and services are presented without warranty. When evaluating offers, please review the financial institution’s Terms and Conditions. If you find discrepancies with your credit score or information from your credit report, please contact TransUnion® directly.
The MLS provides the most up-to-date and easy-to-access information when it comes to pulling comps, but it’s restricted to licensed real estate agents and appraisers. To get your hands on this juicy real estate comp information database, you’ll have to engage the services of a real estate agent. Working with an agent also gives you the benefit of a professional who is adept at running and interpreting comps.
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