Comparable sales, or comps, is a term used to describe recently sold homes that are similar to the one you’re selling. A variety of data points are taken into consideration to determine whether a house is comparable to your own.
Comps are a powerful way to estimate the value of a house and set a competitive price for it. Here’s how you can go about finding comps when you’re selling a house.
Search Within Your Location
When it comes to pricing a home, the most important factor to take into consideration is its location. Experienced real estate agents will often suggest that you should look at home within quarter-mile to half-mile radius to get data for comparable sales. That’s because real estate trends don’t just change from city to city, but also from neighborhood to neighborhood.
Start your search for comps close to your own home and slowly branch out into other parts of your neighborhood. If you can’t find enough similar properties within that area, expand your search by a little bit. But remember that the more comps you can find within your neighborhood, the better.
Look for Recent Sales
Timing plays a major role in the way a home is priced. The same home could sell for $400,000 in spring but get only $350,000 in one of the winter months. The way seasonality affects housing prices depends on the dynamics of your local real estate market.
In order to get an accurate idea of how to price your own home, look for recent home sales in your area. Homes that have sold within the previous three months are the ones to keep an eye out for.
Homes that are listed as a pending sale also serve as valuable data. These are homes for which the seller has received an offer but hasn’t closed the deal. Since these deals are active, they give you a good understanding of the current state of the market.
Consider Size and Utility
Homeowners will often filter out homes based on their size. And size is important; a 2,000 square foot home is going to be priced very differently than a 4,000 square foot home.
That said, how the area within a home is used is sometimes a bigger factor than its square footage. For example, there could be a 4,000 square foot property for sale in your neighborhood that has two bedrooms and two baths. If your own home has two bedrooms and two baths but is 3,000 square feet, you may still be competing with the 4,000 square foot home.
So when looking for comps, don’t automatically ignore homes that are a different size than your own. Look at their utility so you get a clearer picture of how they stack up against your own.
Views and Features Matter
We’ve already seen how location is a key determining factor in the way a home is priced. It’s important to remember that not all homes of a similar size within the same neighborhood are made equal. It also matters where in a neighborhood or apartment building a home is located.
Consider two units that are in the same building. One home looks out onto a lake while the other faces a busy street. The former is probably going to demand a higher price given its access to a better view.
Similarly, you should look for homes that come with a similar feature-set to your own. If your house is solar energy equipped and has a security system, you should take that into account when looking for comparable sales.
Make Use of the Multiple Listing Service
The Multiple Listing Service, or MLS, is a database with information about all the real estate transactions that have gone down in a particular area. It was put together by professionals in the real estate industry as the go-to resource for market data.
If you’re looking for robust data based on which to find comps, look no further than the MLS. Most MLS services have information about sales going back over 10 years. Some have advanced search and filter features that let you find homes based on square footage, home components, features, and so on.
The only drawback to using the MLS is that it does cost money to access. Most MLS services start at around $25 per month. However, if you work with a real estate agent you should be able to get data on the MLS through them.
Take Advantage of Free Online Tools
If you don’t want to pay for access to the MLS, you can always make use of free online tools to find real estate comps.
There are a number of public websites that have historical data from sales that have already happened as well as information on homes that are currently for sale. Zillow, Realtor.com, and Redfin are some of the online tools that you can use as part of your research to find comps.
When using an online tool such as the ones mentioned, start by entering the name of your city and narrowing the search down to your neighborhood. Then use the available filters to find homes that are around the same size as yours with similar features.
The prices of homes currently listed for sale may not be the best barometer to go by. Listing prices and selling prices can differ significantly since buyers are often able to negotiate down prices. So as far as possible, source data from sales that have already been closed.
Ask Your Agent for a Comparative Market Analysis
One of the advantages of working with a real estate agent is that you can easily access a lot of the information that you need to price your home competitively. A comparative market analysis, which is a report about the selling prices of homes similar to your own, is one such thing.
Real estate agents use data from listings in your area to generate a comparative market analysis. This saves home sellers a lot of time and effort because agents know exactly what factors matter when determining which homes serve as comparable sales.
Clever Partner Agents provide clients with a complete comparative market analysis for absolutely free. If you decide to work with one of our agents, you have to pay only a 1% commission, as opposed to the standard 3% charged by listing agents.
If you’re ready to sell your home at a competitive price, fill out the form on this page to find a Clever Partner Agent near you.