Whether you are buying or selling a home or entering into any other type of real estate transaction, chances are you will hear a lot about “comps” so it might come in handy to understand what they really are and why they matter.
Comps are comparisons between your property and other similar properties. Age, location, amenities, and the general condition of the home are all used to compare your property against others in the same general vicinity in order to establish a price or fair market value. Appraisers can only use properties as a comparable if it is the same city as the subject property, even if it is on the opposite side of the street; if it is in a different city, it CAN NOT be used.
Why the Asking Price of Your Neighbor’s Home Doesn’t Count
Many sellers mistakenly look at the asking price of homes in the immediate vicinity when trying to establish a listing price, but that is often a major mistake. Actual sales data is a much more reliable indicator of value, since some sellers can be overly optimistic when it comes to setting an asking price. The period of time of when a sale closed escrow is also a closely watched, for example it is usually within 90-120 days.
Buyers also benefit from obtaining accurate comp data in order to determine what amenities, upgrades, and other items are included. Even homes that superficially look exactly the same in terms of square footage or floor plans may have substantial upgrades or extras that dramatically impact the price of the home.
Get the Most Accurate Data
It is a good idea to insist upon accurate and up-to-date comps when buying or selling a home, and best to not confuse true comps with estimates or other inaccurate sources of data.
Many popular websites like Zillow and Trulia use estimates based upon self-reported data or generalized insurance replacement rates. While these may be useful for rough guidelines, they may cost you tens of thousands of dollars when buying or selling a home. It is best to only work with an agent who provides the latest information specific for the area you are considering.
Age, condition, maintenance, upgrades, amenities, landscaping, appliances, energy efficiency, attractiveness, and even whether or not you have a corner lot can make a tremendous difference in the desirability and price of a home.
Having worked in the Lakewood and Long Beach area for over 28 years and having sold over 1,000 homes I have come to know that the only way to determine the true value of a home is to do the proper research using the most accurate and up to date statistics and data. If you would like to find out what your home is worth, please visit www.LakewoodPrices.com and I will provide you with a computerized market analysis.
If you have any specific questions, please feel free to just give me a call ~ 562-882-1581.
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