What are comps?
Comps — or comparables — are the single most effective way to ensure you’re pricing your home to sell while also maximizing your revenue from the sale. Basically, they compare other recently sold or pending homes in your area that are a lot like yours. Knowing what buyers are willing to pay for similar homes clues you in to what you can realistically get for yours.
The key is here is finding comps that are as accurate as possible for your home. The most effective comps score in three key areas:
Location, location, location
The old real estate adage strikes again. You can often get a four-bedroom house in a rural area for the price of a tiny oceanfront condo. Why? Location matters. And that’s especially true for comparables. So if you want to make sure you’re listing your home at the right price, it’s important to price it based on local market activity.
And you want to be as location-specific as possible. Existing boundaries — like school districts and neighborhood lines — are helpful here. The closer your comps are in location to your house, the more accurate they’ll be.
Don’t forget features
Easy, right? Your next door neighbor’s house just sold, so you can use that as a comp, right? Wrong, unless that house also meets a few additional conditions. A good comparable is going to be as similar to your house as possible. Of course, that means the basics like the same number of bedrooms and bathrooms and similar square footage. But don’t forget about other features, either.
Maybe your neighbor has an electrical tower behind their house, while your backyard has panoramic views. They’re definitely not a good comp for you. You’d be better served by looking at the house up the street that has a slightly smaller square footage but a similar view. Other features like upgrades (e.g., granite countertops, walk-in closets), the overall condition of your house, whether you have a pool and how much parking you have are all considerations. At the end of the day, when you’re hunting for comps, it’s better to look for houses that are as much like yours as possible. If that means you have to extend the boundaries of your search, so be it.
Current listing status matters
Okay, so all you have to do is pop on Zillow, Redfin or Trulia and find some for-sale homes that look like yours and are relatively close by, right? Actually, no. Homes currently for sale aren’t a good place to go for comps because they still haven’t sold yet. If you base your comps on the batch of neighbors who think they’re going to be millionaires from selling their two-bedrooms, you’ll be way off.
Instead, look at homes that have closed in the last six months or less. The closer you can get to the present, the better. In fact, if you can find homes with sales pending, that’s ideal.
Using comps to sell your home
Now you’re ready to price your home competitively. A good benchmark is to find five or six really solid comps. Once you’ve gathered the handful of recently sold or pending homes that are similar to yours and located near you, you’re ready to determine your own home’s selling price. If their prices are all very similar, your work is easy. Price yours just like them.
If most of them are similar but you’ve got one outlier, toss it. Base your list price on the majority.
If they’re all over the place, you’re in a tricky spot. You can either keep looking for comps until a pattern emerges or you can decide what’s important to you. If you want to sell by the end of the summer so you can have your family re-settled before the new school year starts, for example, it might be worth listing on the lower end of the spectrum. If you’ve got tons of time and are feeling patient, list high and see what happens. Either way, you’ll know that you’re making an educated decision based on what’s right for you and your current market activity.
For a list of current comps in your neighborhood and to find out the value of your own home, I can help. Contact me at 626-500-5504 or via email here
Article Credit: https://freshome.com/moving/comps-101-home-selling/