Essentially, they are recent sales of nearby homes that are similar to the property you are interested in buying. Comps are a commonly used tool to help determine a fair value for a property.
What you need to know:
- Don’t settle for a generic “comps” search from a generic website (I’m not going to mention any names). Dig deep and analyze. Have your agent analyze all of the potential comps. Make sure the comps you use are as similar to the subject property in style, size, age, condition, amenities.
- Comps should have a close of escrow/sale date within the past 3-6 months of your pricing evaluation.
- Generally, the closer in distance a comp is to the subject property the better. However, it always doesn’t work out that way and you might have to look out further to find homes that are similar to the subject property.
- Make sure you take into consideration the pricing implications When using a comp in a more (or less) desirable neighborhood.
- It’s also a good idea to look at Pending (have accepted an offer, but has not officially closed) properties.