When assessing a property’s value, many investors and real estate professionals refer to the comparable sales in the area. These comps tell you exactly what other similar properties have sold for as well as the asking price. You can find a few comps in your area and be able to pretty clearly establish the market value of your property. But there are a few key bits of information that you will want to pay attention to as you review the comps.
Timing is very important when dealing with comps. If you were to look at a house that sold during a real estate boom and then revisit the next sale ten years later during a real estate slump, the pricing would be drastically different. In some cases, you might not be able to find exact matches with current sales but a real estate professional can assist you in evaluating the most recent sales in the area and using that size and cost information to get you a good estimate for what the market will bear for your property.
Another factor when looking at comps is the current condition of your home and the homes that have recently sold. If you are in an older neighborhood and the other homes sold with little or no renovation, then your newly renovated home should fetch a much better price. Added featured such as new energy efficient window and doors, home automation systems and commercial kitchen appliances are all features that might not have comps in your area so you will want to be sure to include a detailed list of the upgrades in your sales material. In addition, there are features that won’t appear on comps but that you will want to highlight in your sales information. If your property is in a neighborhood that is near a very desirable school, then call that out and label the house as family friendly. If the city’s best dog-park is around the corner then note that and add a great picture of the newly installed doggie door.
Comps are a great way to gauge what other houses in the area are selling for currently and what features they are offering. It is also a good way to know what the buyers in the area may have seen when they were out shopping for a home. The comps give you the list of all of the most desirable features because those are the houses that sold. You might also want to walk through some of the homes that have not sold to determine why they are still on the market.
There is a lot of information to be learned from local comps and it is a good starting point to determine your asking price. You want to be sure that it still allows for your target profit and is reasonable enough to entice a fast sale.