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In order to get a good idea of the value of a house, you need to look at comparable properties that have sold recently in similar homes in the area with similar features. We call these real estate comps.
It’s also wise to create a comparative market analysis (or CMA) before making an offer on a home. Whether buying or selling, real estate comps can help determine the fair market value of a property.
In most cases, an estimate of what a home might be worth can be created by including the most recent sales, in the nearest neighborhood, with similar features.
There are several ways to find real estate comps:
Create Real Estate Comps Online
Your first step, if you already know what type of property you’re interested in buying or selling, is to check online real estate portals that show recent sales data. You can perform a search on a real estate website for homes like the one you are going to buy or sell.
Include the size within a couple of hundred square feet, a similar year, number of bedrooms and bathrooms, and top features like a pool or finished basement.
Take the 3 most recent sales, and create an average. As a Las Vegas real estate agent, I do my best to find homes that have sold in the past 30-days.
If I can’t find homes that match up in size and features, I’ll use the square foot method. This is where you take the average price per square foot of recent sales, and multiply that by the square foot of the home that I’m running a comp on.
Then, I can estimate the additional value items that make this house unique.
Find Homes in the Neighborhood
If you know what neighborhood you want to live in, or sell in, drive around the area and look at properties for sale and for rent. Jot down addresses of houses with similar features including bedrooms, bathrooms, and square footage of land or floor space if that information is on a sign near the front door.
Map your route so you can find these properties again easily and talk to real estate agents who might be able to let you look at MLS (Multiple Listing Service) data showing sold prices as well as current listing prices in order to get more accurate data than property signs can provide.
If you can find a sold home online, you can create a real estate comp by averaging the sales prices. Sold listings are more accurate than active listings because a list price isn’t realized until it’s sold. Some homes will sell for less, and in seller’s markets, maybe more.
Let a Real Estate Agent Create Your Comps
If you can’t find sufficient information online or on street signs, contact your local real estate agents and ask them for help. In Vegas, we are available at 702-604-7739.
A real estate agent is going to have more accurate information in their MLS data. They can look at recent sales, homes that are under contract in pending or contingent status, as well as current listings.
In a neighborhood where there are many home sales, you can create a median home price by disregarding the highest and lowest prices and then take the new average.
A real estate agent will most often pull 3 recent sales, 3 active listings, and 3 expired listings to create a CMA.
The expired listings will indicate potential pricing issues and where others before you went wrong. There will be a listing datasheet, often with pictures, that can eliminate properties that are obviously in disarray or have another reason they may have expired.
The active, and under contract listings, give a good indicator as to where the market may be going.
The homes that sold offer the best indicator for probable offers on a house.
Examine Property Tax Assessments And Sales Records
Examine property tax assessments and sales records at the county government office, city hall, or both to find potential real estate comparables that aren’t yet on the market or, if they are being sold by an estate after someone has died, have not been put up for sale yet.
It’s also possible to use these types of resources to get information about houses with older sales prices in order to look for trends over years instead of months or weeks. The data might be on paper copies in filing cabinets or online through databases accessible from home by anyone who can connect to your town’s network.
Meet with a Real Estate Appraiser
You can meet with a professional appraiser to learn more about the methods used in your area to determine the fair market value of properties before you buy or sell.
Similar to the information available from real estate agents, an independent appraiser’s assessments will be a little more detailed but also more expensive than what you can find online.
Real Estate Market Reports
While some homes will be unique, in areas like Las Vegas, many neighborhoods offer properties that are very similar. Looking at a real estate market report can provide averages of home prices in a particular area.
The main features of the comparative properties for this kind of comp will include averages (or median prices) or recent sales according to the type of property (condo, single-family residence, mobile home, land, etc.), and the area.
It’s a quick way to get a real estate comp to have a beginning number before you find comparative active listings and sales by feature.
Selling Your House
The listing price of a home is generally guided by the numbers in the comparative market analysis. If it’s a buyer’s market, pricing on the lower side of the range can be beneficial. In a seller’s market, pricing on the high side of the range can bring in a higher sales price.
Yet most often, it will be the average that the home eventually sells for. Keep in mind, that if you price too high, you may be on the market longer and could see several price reductions prior to selling your house.
This is why it’s key to use the most recent sales possible, have a real estate agent create your comp, and consider splurging for an appraisal to help set the price right.
The closer you get the fair market value when listings, the more likely you are to sell fast.
Call 702-604-7739 to get an estimated value of what your home worth could be today. You can also use this home value calculator that uses comps to determine a potential sales price.
Buying a Home
If you are running comps to purchase a property, you are smart. This data can prevent you from overpaying for a house, or from losing the house due to being outbid.
While an appraisal contingency in your offer can help “set the price”, in some markets, contingency appraisals are removed. In others, the seller might ask for the cash difference.
For example, if you are buying a house and offer $250K, and the home appraises for $230K, you can ask the seller to come down to the appraised value. In other markets, the seller might ask you to pay $20K in cash to make up for the difference in the appraisal amount which you obtain a loan for, and the purchase price that you offered and they accepted.
Be sure to talk to your real estate agent about the appraisal contingency.
In the case of a for sale by owner, you may want to present the comps in your area if you believe they are overpriced. It’s a good idea to set an appointment to present up to the date market information that supports the purchase price in your offer.
Keep in mind that a FSBO (For Sale By Owner) isn’t working with a real estate agent. They are often using outdated information or current listings to set the listing price of their property.
If you can educate them on the accuracy of your data, they may see your point and accept a lower price offer.