How to Find Real Estate Comps in My Area

What Are Real Estate Comps?

Real estate comps—or real estate comparable listings—refer to the sales records of recently sold homes that are similar to the home you’re interested in both in features and in general location.

Comps are used by home appraisers and real estate agents to determine a property’s appropriate value. The goal is to gather data on homes that are as similar as possible to the one currently being evaluated, with the notion that whatever those homes sold for likely sets the range for what a particular home is worth (at least insofar as what buyers will pay for it, which is, ultimately, a significant part of what determines its value).

Video

Who Uses Real Estate Comparables?

Real estate comps can be useful for a variety of real estate professionals as well as members of the general public who are on the hunt for houses. Depending on your job or your home buying goal, comparable sales can provide invaluable insights toward making the best decision regarding where to live or how you provide the best possible service to your clients. Let’s take a look at how house comps can be useful for people from virtually all walks of life.

Home Buyers

Comps are a great resource for buying a house. As we covered previously, real estate comps can provide valuable knowledge for house hunters who think they’ve found the home of their dreams. Once you’ve zeroed in on a property you’re thinking of making an offer on, researching similar properties in the area helps verify that the listing price is fair. This information is invaluable when fine-tuning your initial offer amount – and it provides a way to guide your strategy when negotiating a final price.

Home Sellers

Real estate comps provide a few critical insights when it comes to selling your home. As you may already know, understanding the prices of similar homes in the area will help you decide how to handle pricing yours. Another, perhaps less obvious, key benefit is that it can help provide clues on what selling points to highlight when you list your house for sale.

Appraisers

One of the most important steps to completing the sale of a home is the appraisal. This process, usually initiated by the buyer’s lender, calls on a professional appraiser to determine the market value of the house in question. During a home appraisal, an appraiser relies on comps, as well as a number of other factors, to determine an accurate value of a property. This can make or break a transaction, making it one of the most important processes real estate comps are used for.

Real Estate Agents

Real estate agents use the MLS (multiple listing service) to pull real estate comps, which are then used to run a comparative market analysis. This allows them to give the best advice possible to their clients, whether they’re buying or selling property.

How to Adjust Real Estate Comp Values

Adjust the price of any comparable properties if they are superior or inferior to the property you’re purchasing. If a comp sold for $180,000, then you add or subtract adjustments to account for positive or negative features of your property. That helps you determine an exact price.

Calculating adjustments is a judgment call based on an individual market. There is no “across-the-board” figure for square footage, garages, or lot size. It is up to you to determine what the actual adjustment figures are—which is why it’s so important to familiarize yourself with your market.

It may cost $100 per square foot to build a home, but that doesn’t mean you add $100 for every extra square foot. The price of a new build or addition is determined based on the entire house. Comps factor in individual variables, like square footage, bedrooms, and baths—and market fluctuations.

Related: 3 Real Estate Deal Analysis Rules Investors MUST Know

Usually, you will see appraisal adjustments of $20 to $40 per square foot for above-grade square footage and less for basements. The higher range is usually for a more expensive house with higher build quality.


Based on the real estate comps, the subject property is worth $182,500.

5. Request a comparative market analysis (CMA)

Real estate agents and brokers use CMAs* to give sellers all the details they need before listing a house for sale. Finding the listing price sweet spot is essential to a quick sale. The best listing price is the one that’s not too low where you end up leaving money on the table or not too high where the home doesn’t sell at all. And for buyers, a CMA can help verify if a home is a good deal and pinpoint a competitive offer that will be taken seriously—without going overboard.

A CMA also provides the most accurate data and details about the home and surrounding area. However, an agent’s CMA is more than just the numbers. The agent provides expert advice to help you assess the home, the current market, prices, and other factors that could affect your list price.

Many real estate agents and brokers have software they use to generate comprehensive CMA reports. If you’re creating your own report, it would be best to use a spreadsheet to keep track of your research.

A typical CMA will include:

  • The address of the property and three to five comps in the area
  • Description of each comparable property, including elevation, floor plan, and the number of bedrooms and bathrooms
  • The square footage of each property
  • The sales price of each comparable property
  • Dollar adjustments will be made for any differences
  • The adjusted sold price per square foot of each comp

*This is not intended as an appraisal and is not a substitute for the services of a professional, licensed appraiser. 

Finding Real Estate Comparables

When you’re looking for real estate comps in your area, it’s best to work with a real estate agent. Although this is recommended, it doesn’t mean it’s not possible without one. Here’s how you might find and analyze comps with a real estate agent, as well as alternative ways to find and use comps.

How Do I Find Real Estate Comps In My Area?

The ideal way to find real estate comps in your area is to explore your local multiple listing service. The MLS is a database that real estate agents use to list homes for sale. The database provides extensive information on homes that are currently on the market, as well as those that have already sold. As such, the MLS enables individuals to explore recently sold properties and obtain enough information to determine whether those homes are similar enough to the subject property to be considered a comp.

Unfortunately, the MLS can only be accessed by licensed real estate agents. So, if you want to find the best and most accurate comps for the home you’re interested in buying or selling, you really need to work with a real estate agent.

Can I Find Comps For Free Without An Agent?

Although it’s best to consult a real estate agent, it’s still possible to find comps for free without the help of an agent. There are a number of websites that aggregate information taken from local multiple listing services. These websites, which are accessible to the public, allow you to explore recently sold properties in your area and provide insight into the value of these properties.

However, the information found on these websites is often inaccurate or outdated, so you need to be careful when using them. These websites can be used to gain a glimpse into the overall range of a home’s market value, but they shouldn’t be used to determine a specific price.

A more accurate source for finding comps would be to use public property records. Depending on your county, you may be able to find these records online. If not, you’ll have to visit your county assessor’s office, which maintains records of all recorded local sales transactions. However, the public records won’t show the properties’ original asking price nor any seller concessions negotiated.

Seller concessions are the closing costs or repairs that the seller has agreed to pay. They are particularly important to know when analyzing comps because they can distort value. For example, if a comp is purchased for $450,000, but the seller had agreed to pay $13,500 of closing costs, the sales price of the comp would have to be adjusted based on these concessions.

The value of any seller concessions must be subtracted from the sales price of the comp to determine the true value of the subject property. As a result, the comp would be viewed as having sold for $436,500 instead of the full $450,000. This shows that you can’t truly use a property for comparison without knowing the specific terms of the sale.

Is It Best To Use A Real Estate Agent When Finding House Comps?

While you can find comps for free, keep in mind that searching for comparable properties is only the first step in creating a comparative market analysis to determine the fair market value of a home. Once you’ve found comps for the property, there are still three more steps you need to complete to determine the value of the property you’re interested in.

First, you must analyze the comps to see how they differ from the property and calculate the approximate costs of those differences. Then, you must adjust the sales price of each comp to determine how much each comp would have sold for if it were identical to the subject property and sold under current market conditions.

Finally, you have to review the range of adjusted sales prices, you’ll need to weigh each comp based on how similar it is to the property and apply those weights to determine the market value of the property.

This process is lengthy and requires a lot of research, as well as a full understanding of how specific elements of properties increase or decrease their overall value. Real estate agents not only have access to the most accurate information, but also possess the knowledge and skills necessary to run a comparative market analysis and arrive at an appropriate price for properties.

That’s why it’s highly recommended that you enlist the services of an agent when using real estate comps to estimate the value of a property.

Types of Comps

When looking at comparable home values, there are a few different categories that you can examine. These include home sales, pending sales, current homes for sale in the area, expired listings, and withdrawn properties. The values of each of these different listings can help you gauge what listed values of the similar properties in your area successfully got off the market. The expired and withdrawn properties in your area can help inform you of what listed prices were unsuccessful.

Request public records from your county

Most counties maintain pretty good records on the sale prices of homes, and these can be useful to you when you’re trying to pull up information on real estate comps. The advantage here is that you can probably get information going a bit further back than what you’ll find through other channels. (Many sites only keep info on recently sold homes available for a few months.) Call your county office directly to find out how to access these records. Some counties make them available online, while others require you to make an in-person visit.

7 Factors to Consider When Looking at Real Estate Comps

As you consider real estate comps for a property you want to buy or sell, keep the following factors in mind.

  1. 1. Square footage: Two houses may have the same number of bedrooms, but how many square feet are those bedrooms? Square footage can define the difference between a spacious house and one that feels a bit too restrictive.
  2. 2. Number of rooms: Two house comps can have the same square footage, but they can function very differently depending on how many rooms they have. If most of a home's square footage is dedicated to a massive family room, it does not compare one-for-one with a house broken up into many small rooms.
  3. 3. Lot size: If you like to spend time in your yard, pay attention to lot size. If two homes have the same square footage but sit on very different-sized lots, they aren't actually comparable properties.
  4. 4. School district: Families with school-aged children may care about the home’s school district. If you do not have school-aged children or if you have enrolled your kids in private school, this housing comp may mean less to you. However, it may affect your eventual resale value.
  5. 5. Walkability: If you care about having amenities within walking distance, factor that into your real estate comps. Conversely, if you prefer to be out in the country far from noise, consider that factor as well.
  6. 6. Taxes: Different municipalities charge different amounts of property tax. Consider taxes when deciding whether two homes are truly comparable.
  7. 7. Local markets: Real estate comps only work within the same market. For example, a condo in New York City is not going to cost the same as a condo in St. Louis. Keep your real estate comps local so that buyer and seller can remain on the same page.

How to find comps for your home

All it takes to find appropriate real estate comps is a little bit of research. Here’s how to go about it in five easy steps:

1. Understand your home’s specs

To find appropriate comps for your home, your first step is to get clear on the property. Make a list of all the details that define it, such as where it’s located, its size, how much land it sits on, the number of bedrooms and bathrooms, amenities and any special finishes or upgrades.

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.

2. Search for similar recently sold homes

Once you have an understanding of your home’s attributes, the next step is to look for recently sold or pending properties with similar characteristics. If you are working with a real estate agent, he or she will use the local MLS (Multiple Listing Service) to give you a rundown. If you’re starting out on your own, sites like Zillow and Redfin can give you a sense of the local market. It’s important to search for “sold” homes, not “listed” ones, because listings only show the asking or list price, not the price a property actually sold for.

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. Pay close attention to other amenities, too, such as whether parking is included.

Ameralis typically recommends looking for properties that have sold within the last six months. If the housing market in your area has been slow, you may have to look beyond the six-month mark — but that’s not likely these days. 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.

3. Narrow down your list

Once you’ve identified comparable candidates, inspect them more carefully to find the ones most similar to yours. Ameralis suggests compiling a list of four to six comps in order to appropriately evaluate your property.

If you live in a very active housing market, you may want to get ultra-specific about your criteria. For example, two homes with similar square footage and finishes, within a quarter mile of each other in the same school district, both with in-ground pools, are likely to have very similar values.

Conversely, if the home you’re evaluating is unlike what has sold nearby, or is in a rural or sparsely populated area, you may need to relax your search criteria.

4. Get the whole picture

There’s only so much information you can gather online. Some properties might look like a near-perfect match on a screen, but in reality, they could have key differences that impact their value. One home might be on a cul-de-sac with stellar curb appeal, for example, while another might have ever-present noise from being near a highway. If possible, see the properties in-person — or reach out to the agents who sold them to get additional details that may not be obvious in an online search.

5. Do the math

Once you’ve settled on your four to six comps, simply compare the sale prices of each to get a rough idea of your home’s fair market value.

Or, try crunching some numbers to get another perspective. For instance, you can look at the square footage of each comp and divide its sale price by its number of square feet. This will indicate the home’s price per square foot, or PPSF, a frequently used metric in real estate. You can then take the average PPSF of all the comps on your list, and using that dollar value, multiply it by the number of square feet in your home.

For example, say you pulled four comps with PPSFs of $200, $217, $222 and $233. The average of those figures is $218. If you multiply $218 by the square footage of your home, for instance 2,100 square feet, your home’s value based on comparable PPSF might be around $457,800. With this calculation, you now have a ballpark estimate of what your home may be worth.

How can I be certain I am finding the most accurate comps?

When checking house comps, it’s important to have relevant, current information. Follow these tips to get the best results:

  • Compare only sold homes – List price and sale price are not always the same. That’s why active listings are not included in comparables. Santistevan explains to her sellers that sold comps are what an appraiser uses and are what they should focus on for pricing. “Let’s just say I tell a seller that I think their home is worth about $300,000 and they tell me, ‘My neighbor’s listed for $375,000.’ Well, your neighbor hasn’t sold yet.”
  • Make your search “hyper local” – Carroll begins her comp search in the same subdivision. If necessary, she widens that to the same township and then to the same school district.
  • Study the photos carefullyPhotos may reveal updates or upgrades that can make a difference in the comp.
  • Better yet, visit the property – Photos don’t tell the whole story. Visit the property to better ascertain the level of maintenance, assess curb appeal, gauge the level of traffic, witness local attractions, and experience the neighborhood ambiance.
  • Check out the area – When you visit, take time to explore the neighborhood and its amenities, such as parks, shopping, restaurants, schools, and other services. Walkability, parking, or quiet may be important aspects of the area.
  • Be certain it’s the same type of home – Comps only work when they compare similarities. A mid-century modern won’t be a fair comparison for your brick colonial.
  • Adjust for seasonality or market conditionsHolidays and school schedules can impact the housing market. So can inventory. Know if you’re in a buyer’s or a seller’s market. If your comp is from June and you’re listing in November, you may have to make some adjustments.
  • Partner with a top agent familiar with the area – Knowing the area and its sales history can make a big difference, so it’s important to find a top agent familiar with your neighborhood.
Source: (freestocks / Unsplash)
Source: (freestocks / Unsplash)

Robert Reffkin

Robert Reffkin, the founder and CEO of Compass, helps you get closer to finding your dream home by simplifying and demystifying real estate.

Explore the Class

Tags

Leave a Comment

Adblock
detector