Editor’s note: This is a transcript of the audio file.
Comps play a big role in the real estate world. Agents and appraisers analyze them to determine a property’s value.
But just how comparable are the sales included in comps? I’m Janet Stauble with your Bankrate.com Personal Finance Minute.
It’s easier to find identical homes in planned developments. But elsewhere, even houses on the same street can vary greatly. Agents look for homes with similar square footage and the same number of bedrooms and baths. A good rule of thumb? Compare homes where the square footage isn’t more than 10 percent higher or lower than the property being priced.
Proximity is a key with comps, so knowledge of the neighborhood and school district is crucial for determining comps.
And take the word “recent.” A recent sale could mean it happened within 90 days, but “recent” can actually look back as far as six months.
Comps get tricky when you throw short sales and foreclosures into the mix. Buyers and sellers disagree on whether distressed sales should influence prices for all sales, or only for other short sales and foreclosures.
Want to learn more? Log onto Bankrate.com. I’m Janet Stauble.