When you're buying or selling a home, one term you might come across is ""comparables"" or ""comps"" for short. Comparables are an important part of the real estate process, but what exactly are they and why do they matter? In this article, we'll dive into everything you need to know about comparables in real estate.
What Are Comparables?
Comparables are properties that are similar to the one you're buying or selling in terms of location, size, features, and condition. When determining the value of a property, real estate professionals look at recent sales of comparable properties in the same or similar neighborhoods. These sales are used to help determine the fair market value of the property in question.
Why Are Comparables Important?
Comparables are important because they help determine the fair market value of a property. The fair market value is the price that a willing buyer would pay a willing seller for the property, assuming that both parties are fully informed and not under any pressure to buy or sell. By looking at recent sales of comparable properties, real estate professionals can get a good idea of what the market is willing to pay for a property like yours.
Comparables can also be useful for buyers and sellers when setting a listing price or making an offer. If you're selling a home, you want to price it competitively so that it attracts potential buyers. By looking at recent sales of comparable properties, you can get a sense of what other homes in your area are selling for and set a listing price that's in line with market expectations. Similarly, if you're a buyer, you want to make sure you're not overpaying for a property. By looking at recent sales of comparable properties, you can get a sense of what's reasonable to offer for a particular home.
What Factors Are Considered When Choosing Comparables?
When choosing comparables, real estate professionals look for properties that are similar to the one in question in terms of location, size, features, and condition. Here are some of the factors that are considered:
- Location: The comparable property should be located in the same or a similar neighborhood as the property in question. Ideally, it should be in the same school district and have a similar proximity to amenities like parks, restaurants, and shopping.
- Size: The comparable property should be similar in size to the property in question in terms of square footage, number of bedrooms and bathrooms, and lot size.
- Features: The comparable property should have similar features to the property in question. For example, if the property in question has a pool, the comparable property should also have a pool.
- Condition: The comparable property should be in similar condition to the property in question. If the property in question has been recently renovated, the comparable property should have also been recently renovated.
By choosing comparables that are similar to the property in question in these key areas, real estate professionals can get a good idea of what the fair market value of the property should be.
Conclusion
Comparables are an important tool in real estate that allow buyers, sellers, real estate agents, and appraisers to determine the value of a property. By comparing the subject property to similar properties that have recently sold in the same area, they can get a good sense of what the property is worth. If you're buying or selling a property, it's important to work with a qualified real estate agent who has experience in your local market and can help you navigate the process of determining a fair price for the property.
