What Is a Real Estate Comp?
A comp is essentially just a comparable house with similar features to your home or one you want to buy. These comparable prices could help a buyer figure out what a good offer to put in on a home is. Or it could help sellers determine how much to put their property on the market for. Either way, comps can be very helpful, but how do you find them?
As the name suggests, comps are comparable homes, typically ones that have been recently sold. They’re a great way to estimate the value of a home. There are two key ways you can find real estate comps; do an online search or ask a professional for help.
Can You Search For Comps Online?
The internet can be your best friend when it comes to finding comparable homes. It’s usually free, it’s easy, and it’s pretty straightforward. To start, you could try visiting online sales sites that allow you to do a free search for homes within a particular area. It’s a good idea to reference multiple sites to make sure you get the most accurate information possible.
Some websites will require you to sign up to view their listings, but others are free and readily available to the public. You can also try visiting a home comp website like Ownerly. These sites will produce a report with the information you can use to compare homes, including sales prices.
These online resources are a great place to start, but it’s critical to make sure that you’re only looking at homes that have sold recently. By recently, we mean within the past few months, if not sooner—the more recent the sale, the better. The market can fluctuate a great deal in a very short amount of time, so much older sales won’t give you the accuracy that you need.
How To Conduct an Online Comp Search
Online searches can also have other limitations. They aren’t necessarily reliable for certain areas. In locations where very subtle changes or differences between homes have a significant impact, an online search may not be the most informative. For example, some websites may not consider the value of different views for mountain homes, which can substantially affect the sales price.
If you do manage to compile a good list of real estate comps using an online search, you need to know what you’re looking for when you analyze them. This boils down to determining exactly which houses are comparable to the home in question. First and foremost, you need to look at the most similar houses in every aspect. This includes details such as:
- Size: square footage is critical. Look for comparable homes that have square footage of no more than about a 300 square foot difference. The closer the square footage to the home in question, the better. You also want to look for homes with the same number of bathrooms and bedrooms.
- Location: if you’re looking in a city or urban area, make sure you only reference homes within about a mile radius. In the suburbs or rural areas, you can stretch the radius to about 3 to 5 miles. Take into consideration other important location features that have a big impact on prices, such as school districts, busy roads, and distance to public transport.
- Lot Size: Homes with bigger lots tend to be worth more money, so it’s important the acreage is comparable. Landscaping and outdoor features can also have an impact, so ensure that the quality and use of the outdoor space is pretty equal. For example, if a home has a pool, that can bump up the sales price.
- Condition: Don’t skip out on this one. Comparable homes should be in similar condition. It doesn’t matter if everything else matches up, a dilapidated home will be significantly cheaper than one that’s been cared for, renovated, or doesn’t have to undergo expensive repairs.
It’s also advisable to physically visit the comps you’re looking at. Try not to disturb homeowners, obviously, but a drive-by isn’t a bad idea. Why? Because even if you think the home is similar, there may be big differences that affect the price that are only apparent once you look at the property. For example, is the home next to an abandoned building? Is it right at the junction of a busy road?
You’ll probably struggle to find a home that’s almost exactly the same as the one you’re interested in, so what features should you prioritize when looking at comps? Well, the number of bedrooms, bathrooms, size of living space, and even outdoor space is critical. Big differences here can have a drastic effect on the sales price. The location is another important factor that can drive up (or down) a sales price. Sometimes, houses on the same street that are the same size have substantial price differences simply because one has a better view or happens to be in a more favorable school district.
If an online search seems too daunting or complicated, you can always try to find professional help. Real estate agents are your best bet since they have knowledge, expertise, and access to the MLS. They’ll likely be able to find more accurate data, as well as give your their opinion when it comes to comps. If you’re already in the process of buying or selling a home, you can ask your real estate agent to help you out.