You’ve decided to list your home for sale. Whether it is your first time selling a home or your 20th, this is an exciting time. Like any seller, you’re probably wondering what your home is worth.
To find your home’s value, your realtor will often pull real estate comps to asses the value of your home in relation to the nearby market.
You may have heard the term real estate comps or house comparables before. This refers to comparable properties to your home that recently sold.
While appraisers and real estate agents will pull these comparables for you, if you want to get a jump on research, we’ll go over how you can actually pull this information yourself as well.
In this guide, we’ll dive into everything you need to know regarding what these comps are, what they are used for, and how they can help you determine the value of your home.
What Are Real Estate Comps?
Finding out the true value of your home can be a tricky process. While you may have a certain number in your head, it is important to remember that your home is only worth what someone will pay for it.
To help estimate what reasonable price someone would pay for your home is, realtors and appraisers, pull what is known in the business as real estate comps.
Comps are essentially sales records of homes that have recently sold. Real estate agents and appraisers will then use these comps to estimate the potential value of your home.
Before your house is on the market, did you know that you can actually pull these comps yourself to help you get an idea of the value of your home?
How to Assemble Comparable Properties
Finding comparable properties to your home always involves looking at recent area sales that are similar to your own property. You and your realtor will compare these homes to your listing and you can adjust the price of your home accordingly depending on how you stack up.
To find comps, you can use a website that pulls listings from the MLS and find homes that are most like your own as possible.
Follow these simple steps to start curating a comps list of your own.
1. Search Recently Sold Listings
To start assembling your comps, you will first need to search for listings that are most similar to your home.
Many real estate search engines allow you to filter homes by ones that have recently sold or just sold. They may also show you these results on a map.
To start exploring, type in your zip code or the name of your city. You can also narrow down your search by neighborhood.
The closer you are to your home the better to get a more accurate representation of properties.
You should then filter your results by the date the homes sold, the sales price, and the size or number of bedrooms.
Depending on how granular you can get with your search filters, you can filter them by even more details to get better comps. You can filter by schools, school scores, neighborhood amenities, crime, proximity to water, or anything else that makes these homes similar to your own.
Important Notes:
While you should always look at homes that are currently for sale, recently sold homes are really your best comp because the listing price of a home that is on the market may change.
You should also note that the sales price doesn’t include any concessions the seller had to make.
Let’s say a comparable home to yours sold for $200,000. What you won’t see is that the seller gave the buyer a $2,000 credit to repair the furnace and $3,000 in closing costs. This means that the actual sales price was $195,000 and you won’t see this.
Look for comparable properties with a lot of photos. Photos will give you some insight into the condition of the home, the decorating, the updates, and the quality.
A listing price per square foot is also a useful data point. If you don’t see it on the listing, you can calculate it yourself by dividing the sales price by the square footage.
A 1,2000 square foot home, for example, that sells for $300,000 was sold for $250 per square foot. You get this by dividing $300,000 by 1,200.
2. Apply Certain Standards
There are certain standards that are best to apply when looking at sold listings. First, consider the most recently sold listings first. A home that sold over a year ago might not apply to market conditions today.
If the homes in your neighborhood are selling really fast, stick to homes that have sold within the last 45 days.
The next standard to stick with the homes that are similar to yours. If you are in a subdivision, for example, go with a home that has the same floor plan.
Otherwise, look for homes that have similar layouts, a similar number of bedrooms, and a similar size. If your house is a ranch, for example, another ranch is a good one.
Size, in general, is really what matters most. Even if you have the same number of bedrooms, if another home is 1,000 square feet larger, this will change the value.
If someone is looking to renovate, for example, they are looking at the overall size. You can knock down a wall or move things around, but it costs a lot more money to add on square footage so, that is where the value lies.
Important Notes:
You also want to take the location into account as a standard when searching. You should try and get as close to your home as possible. A home two miles away will have a totally different traffic pattern and could have a different school district depending on the area.
If you can look at homes on your same street, this is ideal. Even the same side of the street will help.
You can also look at the date your home was built. If your home is newer or older, this can affect the value.
3. Visit Home Comparables
It is always important to visit your comps if you can. While the photos online are great for research and making your list, photos can be misleading.
Since the best comps are homes that have recently sold, you likely won’t be able to get inside the home, but it can be helpful to walk or drive by them.
For each comp you are using, if you can see them in person, you’ll be able to see more details regarding their construction, the quality of work, and the upkeep.
Visiting these homes will also give you more insight into the location. A busy road will almost always knock down the value. If it has poor curb appeal, this also matters.
Nearby amenities will always increase the value. The closer you are to walkable amenities the better. Access to trails, green space, parks, transportation, and entertainment increases the value of a home.
4. Calculate the Value of Your Home
To calculate the value of your home, use the information you gained from your visits and online to select the three best comps. Take the middle price and adjust some for location, quality, and size if needed.
Use the home’s per square foot price as the baseline for your home. If the home sold for $300 per square foot, for example, but it has a more updated kitchen than yours, decrease the value of yours by a little.
Note that updated kitchens and bathrooms are where the most value can be added. Exterior and landscaping updates matter but not nearly as much as kitchens and bathrooms.
HGTV and other sites list the renovations that add the most value to your home. If your home has some of these, you can increase your value compared to the comps you chose. If the comps have something your home doesn't, you can then decrease the value accordingly.
How Accurate Are Your Home Comps?
If you did your research correctly, the home comparables you found should be pretty accurate in gauging the value of your home.
By choosing the right real estate comps, looking at homes in person, and making adjustments in comparison to your home, you should be able to get pretty close to the true value of your home.
To best get the value, talk with a local real estate professional. Real estate professionals have inside access to comps and know how to assign value to certain property traits.
To start working with a professional today, click here to find out exactly what your home is worth.