Glossary: Comps (Comparable Sales)
Comps (Comparable Sales)
Definition:
Comps, short for "comparable sales," are recently sold properties that are similar in size, condition, location, and features to a property being evaluated. Comps are used by real estate agents, appraisers, and buyers to determine the market value of a property. By comparing the property in question to similar properties that have sold recently, comps help establish a realistic price for buying or selling.
🔍 Did You Know?
Real estate agents typically look for comps within the last 3-6 months and prefer properties within a one-mile radius to ensure a fair comparison.
Picket thinks about comps at an even more granulary other companies. Check out this artticle to learn more.
Examples:
Example 1:
A homebuyer is considering purchasing a 3-bedroom, 2-bath house. The buyer’s agent pulls comps of other similar homes that have sold within the last 6 months to help the buyer understand whether the asking price is fair.
Example 2:
A real estate investor is trying to determine the resale value of a property they are considering flipping. The investor compares the property to comps in the area that are of similar size, condition, and age, and have sold within the last few months, to estimate the potential resale price.
Why It’s Important:
Comps are one of the most reliable ways to assess a property’s market value. They help both buyers and sellers understand whether a listing price is reasonable, assist lenders and appraisers in property valuation, and are critical for negotiating prices. In competitive markets, understanding comps can give buyers and sellers a strategic advantage in pricing decisions.
Who Should Care:
- Homebuyers looking to ensure they are not overpaying for a property.
- Real estate investors who need accurate pricing to determine the potential profitability of a deal.
- Real estate agents and appraisers using comps to provide market insights and property valuations for their clients.
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