What Are Comps in Real Estate?
What Are Comps in Real Estate?
Comps or comparables are similar properties in a given market to the property you are interested in purchasing or selling. They are based on several key criteria:
- Location
- Size (square footage, inside and out)
- Number of bedrooms and bathrooms
- Layout
- Year built
- Condition
- Upgrades and finishes
Why Comps Matter
Comps help price a home accurately by providing a range for its fair market value. While each home has unique characteristics, comps establish a dollar figure that serves as a strong reference point. Market situations vary:
- Active markets with multiple comparable listings
- Limited or unavailable comparables in niche markets
Key Uses of Comps
- Sellers (including FSBOs) determine optimal listing prices
- Buyers establish competitive offer amounts
- Negotiation leverage during escrow if appraisals differ from offer prices
How to Identify Quality Comps
No comp is perfect, but these strategies improve accuracy:
Modern Data Sources
- Real estate websites (Zillow, Redfin) pulling MLS data
- Professional pricing tools for non-agents
Common Pitfalls to Avoid
- Inaccurate sold prices due to post-sale concessions
- Outdated property information from delayed MLS updates
- Missing listings (FSBO/pocket listings)
- Unreported renovations affecting value comparisons
Essential Elements of Reliable Comps
- Location: Within ¼-½ mile radius
- Time Frame: Sold within 3-6 months
- Property Type: Match single-family to single-family
- Home Age: Similar construction eras
- Size Variance: ±300 square feet
- Room Count: Matching bed/bath numbers
- Price/SqFt: Critical comparison metric
Advanced Comp Evaluation Techniques
- Analyze listing photos for finish comparisons
- Study descriptions for hidden upgrades
- Visit properties to verify conditions
- Assess neighborhoods through drive-by inspections
- Document observations with detailed notes
- Consider seasonal trends in market activity
Calculating Property Value
Follow this process after gathering comp data:
- Select 3 most comparable sold properties
- Use median price as baseline
- Adjust for differences in:
- Square footage
- Condition/upgrades
- Location factors
- Unique features (views, landscaping)
Appraisal Considerations
Professional appraisals ($300-$500 average cost) provide official valuations considering:
- Market conditions
- Property specifics
- Local sales trends
Note: Prioritize closed sales over active/pending listings for accurate comparisons. Recent sales (under 60 days) offer the most current market reflection, though 6-12 month old comps can be used cautiously in stable markets.
