Real estate comps (also known as comparable properties or comparables) are recently sold homes that are similar to the property you’re trying to buy or sell in terms of location, size, condition, and features. Comps are often used by real estate professionals to determine a home’s fair market value.
How are Comps found?
There are a few ways to find comps:
- Through a real estate agent: Real estate agents have access to the Multiple Listing Service (MLS), a database of all homes that are currently for sale or that have recently sold. They can use the MLS to generate a list of comps for you based on your home’s location, size, condition, and features.
- Online real estate websites: Zillow, Trulia, and Realtor.com all allow you to search for homes that have sold in a specific area and within a certain time frame. You can also filter your search by other criteria, such as square footage, number of bedrooms and bathrooms, and price range.
- Public property records: Many counties keep records of property sales online. You can use these records to find the sale price of any home in your county, as well as other information such as the date of sale and the buyer and seller names.
Who Uses Real Estate Comps?
Real estate comps are used by a variety of people involved in the real estate industry, including:
- Home buyers: Home buyers use comps to get an idea of what similar homes in their desired area are selling for. This information can help them determine a fair budget and negotiate a good price on a home.
- Home sellers: Home sellers use comps to set a realistic asking price for their home. Overpricing a home can deter buyers, while underpricing a home can leave money on the table.
- Real estate agents: Real estate agents use comps to help their clients buy and sell homes for a fair price. Agents have access to MLS data, which includes information on all recent home sales in a given area.
- Appraisers: Appraisers use comps to determine the market value of a property. This information is used by lenders to determine how much money to lend to borrowers to purchase a home.
- Mortgage lenders: Mortgage lenders use comps to assess the risk of lending money to borrowers. If a home is appraised for less than the purchase price, the lender may require the borrower to put down a larger down payment or purchase private mortgage insurance (PMI).
What factors are considered when comparing Comps?
When comparing comps, it’s important to consider the following factors:
- Location: The location of a home is one of the most important factors that affects its value. Comps should be located in the same neighborhood or in a nearby neighborhood with similar amenities.
- Size: The square footage of a home is another important factor that affects its value. Comps should be similar in size to your home.
- Condition: The condition of a home also affects its value. Comps should be in similar condition to your home.
- Features: The features of a home, such as the number of bedrooms and bathrooms, the presence of a garage, and the type of kitchen, also affect its value. Comps should have similar features to your home.
How to use Comps to buy or sell a home
Once you have a list of comps, you can use them to help you to buy or sell your home. If you’re selling your home, you can use comps to set a realistic asking price. If you’re buying a home, you can use comps to make a fair offer and to negotiate the best possible price.
What Is Trading Comps in Business?
Trading comps (comparables) in business are valuation methods that use ratios to value a company by assuming that it should be worth similar multiples to similar listed companies.
For example, if a company in the tech industry is trading at 10x earnings, then another company in the tech industry with similar growth prospects and profitability could be valued at a similar multiple.
Trading comps are a relatively simple and straightforward way to value a company, but they can be less accurate than other valuation methods, such as discounted cash flow (DCF) analysis. This is because trading comps do not take into account all of the factors that can affect a company’s value, such as its unique assets, liabilities, and competitive landscape.
Despite their limitations, trading comps are a widely used valuation tool in business. They are often used by investors and analysts to get a quick and easy estimate of a company’s value.
What does get Comps mean?
The phrase “get comps” can have two meanings in real estate.
- To obtain comparable sales data. This can be done by using a variety of sources, such as the multiple listing service (MLS), online real estate websites, and public records.
- To obtain a comparative market analysis (CMA). A CMA is a report that analyzes recent sales data for similar properties to determine the fair market value of a specific property.
In either case, the goal of “getting comps” is to gather information that can be used to make informed decisions about buying, selling, or investing in real estate.
Tips for using Comps
Here are a few tips for using comps effectively:
- Use a variety of comps. Don’t rely on just one or two comps. The more comps you have, the more accurate your assessment will be.
- Use recent comps. Comps from more than a year ago may not be accurate, as the market can change quickly.
- Consider the condition of the comps. Comps in better condition will be worth more than comps in poor condition.
- Consider the features of the comps. Comps with more desirable features will be worth more than comps with fewer desirable features.
- Adjust for any differences. If the property you’re trying to buy or sell has any unique features, you may need to adjust the value of the comps accordingly.
Conclusion
Comps are a valuable tool for determining the value of a property. By using comps effectively, you can make sure you’re getting a fair price for your home, whether you’re buying or selling.
Frequently Asked Questions (FAQ)
What are comparable properties in real estate?
Comparable properties in real estate, or “comps,” are recently sold homes that are similar to the property you’re trying to buy or sell in terms of location, size, condition, and features. Comps are often used by real estate professionals to determine a home’s fair market value.
How do comps work?
Comps work by comparing the subject property to similar properties that have recently sold. This allows real estate professionals to get an idea of what the subject property is worth in the current market.
What is a comp in valuation?
A comp in valuation is a recently sold property that is similar to the asset being valued. Comps are used to determine the fair market value of an asset by comparing it to similar assets that have recently sold.
What is comp formula?
There is no one definitive comp formula, as the value of a property depends on a variety of factors. However, a common formula used by real estate professionals is:
Subject property value = (Comp 1 value + Comp 2 value + Comp 3 value) / 3
This formula simply averages the values of three comparable properties to arrive at an estimate of the subject property’s value.
How do you identify comps?
There are a number of ways to identify comps. One way is to simply look for recently sold homes in the same neighborhood as the subject property. You can also use a variety of online tools to find comps, such as Zillow, Trulia, and Realtor.com. Additionally, you can contact a real estate agent to help you identify comps.
Why do we use comps?
Comps are used to determine the fair market value of a property. This is important for a number of reasons, including:
- Buyers: Comps can help buyers determine whether they’re paying a fair price for a home.
- Sellers: Comps can help sellers set a realistic asking price for their home.
- Lenders: Lenders use comps to determine how much money they’re willing to lend to a buyer.
- Investors: Investors use comps to determine the value of a property before they buy it.
What is the full form of comps?
Comps stands for “comparables.”
What is a comp sheet?
A comp sheet is a document that lists comparable properties and their selling prices. Comp sheets are often used by real estate professionals to determine a home’s fair market value.
What is the method of comparables?
The method of comparables is a real estate valuation method that compares a property to similar properties that have recently sold. This method is used to determine the fair market value of a property.
What is the method of comparables valuation?
The method of comparables valuation is a process of determining the value of a property by comparing it to similar properties that have recently sold. This process involves identifying comparable properties, adjusting the values of the comparable properties to account for differences between the properties, and then averaging the adjusted values of the comparable properties to arrive at an estimated value for the subject property.
What are the comparables criteria?
The comparables criteria are the factors that are considered when identifying comparable properties. These factors include:
- Location
- Size
- Age
- Condition
- Features
When identifying comparable properties, it is important to choose properties that are as similar to the subject property as possible. This will help to ensure that the estimated value of the subject property is accurate.
