What are comp sales?

This article originally appeared at the website of New York commercial and residential title insurance provider Hallmark Abstract Service here.

Ever wonder about title insurance? Read Title Insurance 101 here.
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What are comp sales?

Or, in other words, if your looking to list and sell your home, what have other homes in the immediate neighborhood recently sold for?

When the time comes to sell your home a listing price needs to be set. It can be set too low meaning that you leave money on the table, too high which means it will likely sit and get stale with few interested buyers stopping by or priced just right which hopefully means a relatively smooth, quick and successful process.

In determining price one of the terms that will get thrown around by the various participants will becomp sales. A simple phrase and yet oh so important!

What is a comp sale and what role does it play in the sellers determining where to price their home?

From Forbes, ‘ The Home Sellers Guide To Understanding Comparable Sales‘:

1. Apples to Apples: Analyzing the comps entails some detective work. Obviously, your house isn’t exactly like every other on the block. It can be far better – or far worse. You have to wade through and pick out comps that truly come closest to yours. Then make note of what similar homes have that your doesn’t and what your house has that the comps lack? Consider these comparisons:

• Square footage: This is significant for most buyers. Some will even hunt based on square footage alone. And when it comes to pricing, the bigger the property, the bigger the price tag.
• Age and condition: Do you live in a 1910 Victorian? Or is your house practically brand new? Newer homes don’t necessarily command higher prices, or vice versa, but condition relative to age does factor into price. So when you compare your home to others, stay within a five-year range.
• Number of bedrooms and baths: How many your home has – and where they’re located – can radically change the price. Like square footage, families often shop for homes based on these numbers.
• Amenities: This one’s pretty straightforward: the more perks you have, like walk-in closets, a pool, spa, gourmet kitchen, and so on, the higher the price.
• Lot size: Is there room for the buyer to add on to the house or plant a sprawling rose garden in the backyard? The exact acreage of your land correlates to price. When you compare your home to others, stay within .05 acres.
• Condition: A tear-down, a fixer-upper, updated, or pristine – where do you fall in the spectrum? The condition of your house can be a deal-maker or a deal-breaker. That’s why you have to pay close attention to other homes’ upgrades to make a fair assessment of how they affect value.
• Location: This factor is multi-faceted. It relates not only to your state, city, and neighborhood, but also to where your house sits on the street. Does it face an eyesore or busy intersection? Does it have a view? Does it get nearby freeway noise or sit on the bank of a tranquil lake? Don’t forget to take these location nuances into consideration.

2. Don’t Look Back (Too Far) – The price of your home today can’t be compared to the selling price of your neighbor’s identical home 6 months ago. This has been a year of quick price increases in most cities. If you’re looking at comps further back than 3 months, dump them. Your house could be worth more. In fact, in some of the fastest-paced cities, like New York, Miami, and San Diego, homes move so rapidly that sellers should only look at the prior 60 days of sales, if possible.

3. Go Online and Check Prices – A wealth of information lives online, and it’s accessible with the click of a mouse. Right here on Truila, you can see exactly what homes have recently sold for in your neighborhood; just enter your zip code, and select “sold” from the filters menu. How does access to this information change the way you price your house? First, think of it as a ballpark guide – not an exact number. Then price your home confidently based on the similar comps knowing you have more information than ever before, and it’s literally at your fingertips.

4. Check Out the Competition in Person – Don’t analyze your comps on paper alone. Get moving! Ask your realtor to recommend homes you should drive by or open houses you should attend. It’s important for you as a home seller to know what’s out there. Find out up close and in person where your home stacks up against the competition.

5. List vs. Sale Prices – The difference in percentage between list prices and actual sales prices for the homes in your neighborhood speaks volumes about the current real estate climate. This number is a strong indicator of which direction the market is moving, and it will suggest how much under – or over – your ideal asking price you can expect to get for your home. Anyone can throw a house on the market at a high price. But the number you want to look at closely is the sale price of the home, which is much more indicative of the actual value.

6. Know What’s Not Selling – You can learn a lot by observing not only what IS selling nearby, but also what’s NOT selling. Is a home that initially looks like a comp really overpriced for what it offers? How does it compare with your house? What is it lacking that yours isn’t? Once you identify why it’s not selling at its current price, you can avoid the same mistake when determining your own home’s price tag.