Before you begin your search, be sure to have clear goals and run the numbers.
What are comparables?
Comparables, sometimes referred to as “comps,” are properties used for comparison in the real estate appraisal process. When a house is on the market, appraisers and real estate agents look for similar properties nearby that have sold recently to get an idea of what the for-sale house is worth.
When looking at comps, realty professionals find out how much other homes in the area, of similar size and with similar amenities, sold for in order to gain a better sense of how the home on the market should be priced. In planned communities, it is easy to find comps. But it can be a challenge to find comps for one-of-a-kind custom builds and homes in the country.
There are sometimes disagreements about whether a property is comparable to another one, but obtaining comps is still the best tool for determining the value of a home. Buyers want to know that a home has been fairly priced and that they are being asked to pay the going rate based on the home’s location, size, age and condition.
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Example of comparables or comps
Jack and Jenny want to sell their home but don’t know how much to ask for it. Their real estate agent provides a comparative market analysis, which lets the couple see how much similar homes in their community are selling for. Besides sale prices, the comparables analysis details how many bedrooms and baths the houses have, the age and condition of the homes, the lot sizes, and whether their architectural style is similar to Jack and Jenny’s house. With all that information on the comparables, the realty agent can give the couple a very good idea of how to price their property.