What are Real Estate Comps?

March 15, 2023

Real estate comps, short for comparables or comparable sales, are properties that are similar to a subject property in terms of location, size, features, and condition. Analyzing comps is a crucial step in determining the market value of a property. Here's a comprehensive guide on what real estate comps are and how to find them in your area.

Understanding Real Estate Comps:

1. Definition:

Real estate comps refer to recently sold properties that share similarities with a subject property. These similarities may include location, size, number of bedrooms and bathrooms, features, and overall condition.

2. Purpose:

The primary purpose of analyzing real estate comps is to estimate the fair market value of a property. By comparing recent sales of similar properties, real estate professionals and buyers can gauge the appropriate price range for a subject property.

3. Factors Considered:

When selecting comps, factors such as proximity, property type, size, age, condition, and features are crucial. The goal is to find properties that closely resemble the subject property to ensure a more accurate valuation.

Finding Real Estate Comps:

1. Online Real Estate Platforms:

Utilize online real estate platforms and websites that provide recent sales data. Websites like Zillow, Redfin, and Realtor.com allow users to search for recently sold properties and filter results based on various criteria.

2. Multiple Listing Service (MLS):

Real estate agents have access to the MLS, a comprehensive database of properties for sale and sold. Working with a real estate professional allows you to tap into this valuable resource for finding accurate and up-to-date comps.

3. County Property Records:

Visit the official website of your county's assessor's office or property records department. Many counties provide online access to property records, allowing you to search for recent sales in a specific area.

4. Public Record Websites:

Public record websites may offer information on recent property sales. Keep in mind that the data available on public record websites might not be as detailed as that found on MLS or county records.

5. Real Estate Appraisal Reports:

If an appraisal has been conducted on a property, the appraisal report may include information on comparable sales. This can be valuable when evaluating the fair market value of the subject property.

6. Networking with Real Estate Professionals:

Establish connections with real estate professionals, including agents, brokers, and appraisers. These individuals often have access to a wealth of data and can provide insights into recent sales in your target area.

7. Drive or Walk Around the Neighborhood:

Physically explore the neighborhood and look for recently sold properties. This hands-on approach allows you to observe the condition of homes and identify similarities with the subject property.

8. Real Estate Investment Associations:

Real estate investment associations or local real estate groups may share information on recent property sales. Attend meetings or join online forums to connect with investors who can provide valuable insights.

Analyzing Real Estate Comps:

1. Compile a List:

Create a list of recently sold properties that closely match the subject property's characteristics. Include details such as sale price, square footage, number of bedrooms and bathrooms, and any notable features.

2. Adjust for Differences:

Adjust the sale prices of comps for any differences in features, condition, or size. This adjustment helps in creating a more accurate comparison and estimating the fair market value of the subject property.

3. Calculate Price per Square Foot:

Determine the price per square foot for each comparable property. This metric provides a standardized measure for comparison and helps in assessing whether the subject property is priced competitively.

4. Consider Market Conditions:

Take into account the prevailing market conditions at the time of the sales of comparable properties. Market trends and fluctuations can impact property values.

5. Evaluate Days on Market (DOM):

Consider the days on market for each comp. Properties that sold quickly may indicate high demand or favorable pricing, while longer DOM could suggest less demand.

6. Consult with a Real Estate Professional:

Seek guidance from a real estate professional or appraiser. Their expertise can provide valuable insights into the nuances of the local market and help in refining your analysis.

Conclusion

Real estate comps serve as a foundational tool for estimating property values and making informed decisions in the real estate market. By understanding what real estate comps are and how to find and analyze them, buyers, sellers, and investors can navigate the complexities of property valuation with greater confidence. Whether you're entering the market or assessing the value of your own property, the strategic use of real estate comps is a key element in the journey toward successful real estate transactions.