When you’re in the market to buy or sell a house, one of the first things you’ll want to do is figure out what that house is worth. But how do you determine a property’s value? In real estate, there are a few different ways to approach this, but one of the most common methods is to look at comparable properties, otherwise known as “comps.” In this post, we’ll give you a crash course in all things comps: what they are, why they matter, and how to use them.
What Are Comps?
Comps are simply properties that have recently been sold that are similar to the property in question. To generate a list of comps, your real estate agent will likely use something called an MLS, or Multiple Listing Service. This is a database of properties that have recently been sold or listed for sale in a given area.
Why Do Comps Matter?
When you’re looking at comps, you’re not just looking at the sale price of the property. You’re also looking at factors like lot size, square footage, number of bedrooms and bathrooms, age of the property, and any special features or upgrades that might be included. By taking all of these factors into account, you can get a pretty good idea of what a property is worth on the open market.
How to Use Comps
There are a few different ways to use comps when you’re trying to determine the value of a property. The first is simply to look at recent sales prices for similar properties in the same area. This will give you a good ballpark estimate of what your property is worth.
Another way to use comps is to look at properties that are currently on the market and compare them to your own. This can be tricky, because often times homes that are on the market are priced higher than they would ultimately sell for. However, by looking at both the asking price and recent sale prices for comparable properties, you can get a pretty good idea of where your home falls on the price spectrum.
Whether you’re buying or selling a property, understanding comparables is key to making sure you get the best deal possible. And while it may seem like a daunting task at first, with just a little bit of practice it’s easy to become an expert at using comps to value houses!
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