How does my home compare to others? There is no better way to predict what a buyer will be willing to pay for your home than to see what other buyers have been willing to pay for similar homes. Ask a Realtor to do a “market analysis” show you the “comps”.
But what makes a property a good comp? A number of things must be similar in order for your Realtor to consider a closed sale a good comp for your home:
- same neighborhood
- same school district
- similar housing size
- similar housing features
The ideal comp is a home that is the same model, in the same subdivision and which sold in the last 6 months. Unfortunately, exact comps like this are rarely available. So, the next best thing is to find sales that closely match your home, then make adjustments for the differences. The best comps are the ones that will require the fewest adjustments.
Choosing the right comps is imperative, because not all homes are alike. Location, upgrades, amenities, sale date, extras and unique nuances all affect how your home compares to others. Choosing the right comps, and making proper adjustments for differences is the key to an accurate market analysis.
Most people don’t really know how to compare real estate properties, which is one of the reasons they hire an agent. Choosing a Realtor can take the guess work out of pricing a home. But if the Realtor doesn’t choose the right comps, and compares your home to properties that aren’t truly comparable, then you may under-price or over-price your home. If you under-price, you will leave money on the table. If you over-price, you will delay your sale by weeks or months and may not get it sold at all.
The way to know if the Realtor you are meeting with has chosen the right comps for your home, is to ask the Realtor to explain the process that he or she used and to listen carefully to the explanation. If the Realtor can’t explain how the comps were chosen and how they are interpreted, or if the explanation makes no sense to you, find another Realtor. Keep in mind, you aren’t looking for the Realtor who promises you the highest price. You are looking for someone who will help you understand the market, the appraisal process, and who will offer good solid reasons for listing your home at a particular price.
How did the Realtor determine that these were the best comps? Were all recent sales in the area included or were some rejected? Why? Are some of the comps outside the neighborhood? Why? Are they all recent sales? Why not? Were there any adjustments made? Garage size? Basement finish? Lot size? Landscaping? Views? Age of kitchen and baths? Age of windows? Location issues?
Choosing the right Realtor is imperative, because agents are not all alike. It is important that you find someone with enough knowledge and experience to properly advise you how to price your home.