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Real Estate Comps: What Are They And How Do You Find Them?

Recently sold properties that are similar to the property you're looking to buy or sell in terms of location, size, condition, and features are known as real estate comps.

Comps (short for "similar sales") are used to assess a home's fair market value using the sales comparison method of property pricing.

To assess the value of a specific home, the sales comparison approach employs the substitution principle. This theory states that you may determine the worth of a home by determining how much a comparable, similarly desirable property would cost.

Who Uses Real Estate Comps?

All parties involved in real estate transactions use comparable sales data.

Let's take a look at how the information provided by comps benefits house buyers, sellers, appraisers, and real estate agents.

HOME BUYERS: Comps show how much buyers were ready to pay for similar, previously sold properties, making them an invaluable tool for current home buyers.

Buyers often seek up comparable sales in their target location after locating a home they like to assist them to figure out how much they should offer.

Home Sellers: Comps are significant because they assist sellers in establishing a reasonable expectation of their home's value.

Comparable sales analysis gives sellers a more objective way to determine the right listing price for their home.

Sellers can utilize comps to keep their expectations in check and guarantee that their home sells faster because they provide a view into a home's fair market value.

Real Estate Agents: Real estate professionals use the Multiple Listing Service (MLS) to locate comparable properties, then conduct a comparative market study using the information from each comparable property. A comparative market analysis (CMA) is a study that real estate agents present to buyers and sellers.

The study uses the sales comparison approach to pricing to arrive at an estimate of the home's fair market value by comparing it to similar properties that have recently sold or are currently on the market.

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