Whether you are buying or selling a home or other type of real estate, 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.
Do Not Make This Mistake
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. Make sure you ask your Realtor to see a list of homes that have actually SOLD in your neighborhood, their actual selling price and how long they were actively on the market.
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
Insist upon accurate and up-to-date comps when buying or selling a home, and do not confuse true comps with estimates or other inaccurate sources of data. Many popular websites 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.
Work with a real estate 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.
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