Real estate comps: What they are and how to find them in your area

When buying or selling a home, pricing is relative. When buying, how much should you pay? When selling, how much should you ask for? And what’s the actual home value?

The answers all depend on a number of factors that vary based on location, time of year, real estate market trends, and most importantly real estate comps.

What are comps in real estate?

Real estate comparables – or “comps” – are comparable properties in a specific location you want to buy or sell in. Comps are used to determine the value of a home by comparing it to similar properties sold in the same neighborhood or nearby area.

For example, if you’re thinking of selling a three-bedroom, two-bathroom house with 1,500 square feet of living space, homes with similar characteristics in the same general area are helpful when starting to estimate the property’s value.

How do comparables work in real estate?

Whether you’re buying, selling, investing, or making housing market predictions, finding good comps can help you determine the home’s value.

A comparative market analysis, or CMA, can help give you a sense of what your home is worth. In a CMA, an analyst gathers data on the property, finds comparable properties that have been recently sold, adjusts for differences between them, and analyzes market trends to determine the value of a specific home.

Who uses real estate comparables?

Real estate comps can benefit both real estate professionals and house hunters. Depending on your situation and goals, comparable sales can provide invaluable insights to help you make the best decision. The following parties all use house comps in different ways:

Home buyers

Real estate comps are a great resource for buying a house. They can provide knowledge for house hunters who believe they’ve found the home of their dreams. Once you’ve chosen a property you want to buy, researching similar properties in the area can help verify that the listing price is fair. This information can help you fine-tune your initial offer amount and can guide your strategy when negotiating a final asking price.

Home sellers

Comps provide a few critical insights for selling your home. Understanding the sales price of similar homes in the area will help you decide how to price your home. They can also provide clues on which selling points to highlight when listing your house for sale.

Appraisers

One of the most important steps to completing the sale of a home is the appraisal. This process calls on a professional appraiser to assess the value of the home. During an appraisal, an appraiser relies on comps along with several other factors to determine an accurate value of a property. Since this can make or break a transaction, it’s one of the most important uses of real estate comps.

Real estate agents

When running a comparative market analysis, real estate agents use the MLS (multiple listing service) to pull real estate comps. Here comps help give agents the best advice possible to their clients, whether they’re buying or selling property.

How to find a house’s real estate comps

Whether you’re buying or selling a house, pulling house comps is a critical step toward making the right financial decision. While there are several ways to go about this, some are more accurate than others.

Use real estate websites

If you don’t yet have a real estate agent, a quick internet search can give you the information you need to make your comparisons. You can use websites like Redfin to search for homes in your desired area and get an idea of home prices. Redfin also has search tools that can make finding home values and recent sale prices quick and easy.

Scan public property records

If you’d like to take a deeper dive, county record sites can provide an even more in-depth look at the characteristics and sales prices of specific properties and area trends. If public property records aren’t available online, you can also visit your county assessor’s office in person to request these documents.

While requesting records from the last 6 months can help you pull the most relevant data for the most accurate comps, this can be a more time-consuming process and information may be limited or outdated. These records also won’t reflect information such as seller concessions, and factoring in these seller-paid fees will more accurately reflect the amount the buyer paid for a property.

Work with a real estate agent to pull MLS comps

The MLS provides the most up-to-date and easy-to-access information for pulling comps, but it’s restricted to licensed real estate agents and appraisers. In order to access this database, you’ll need to enlist the services of a real estate agent.

Working with an agent has great benefits since professionals are adept at running and interpreting comps. This is especially useful if you’re interested in buying a unique property that may be more difficult to find comparables for.

Factors impacting comparables in real estate

Whether you’re a real estate professional, an eager home buyer, or a seller pulling comps, it’s important to keep some of a property’s key features in mind.

Location

Typically, optimal comps are within 1 mile from the property, but the exact distance depends on your neighborhood and area (rural, suburban, urban, etc.).

Here the old real estate adage “location, location, location,” rings true. For example, a 500-square-foot apartment in Manhattan can be 10 times as expensive as a 5,000-square-foot house in the middle of the country. While the differences aren’t always quite that stark, you get the idea.

Condition

How well-built and well-maintained a home is can be critical to the home’s comparable value. For instance, you might find a significant price difference between a home with a leaking roof and a home with a brand-new roof. When running comps, make sure to take into account the condition of all parts of the homes you’re comparing.

Age

A home’s age also has an impact on its value and can influence other factors that affect real estate comps like a home’s condition. Even if two homes have the same number of bedrooms and bathrooms, newer homes tend to have higher values so a home built in 1980 and one built in 2015 may not have similar values.

Number of rooms

A four-bedroom, two-bathroom house may seem like a pretty close comp for a three-bedroom, two-bathroom home, but that’s not necessarily true. That extra bedroom can often mean a large price difference. Don’t forget to factor in size as well since square footage can significantly impact home value.

Lot size

While acreage value varies by location, more land typically means more value. Even if the houses themselves are comparable, if one sits on 2 acres and the other sits on 10 acres, this is important to note when determining the values of both properties. This is especially true for location as a large lot near a popular urban center is likely to be significantly more valuable than a rural plot of land the same size.

Time frame

Recency is a pivotal consideration when looking for real estate comps. Comparing your potential home to a house that sold 1 month ago is going to give you a much more accurate value assessment than looking at one that sold 2 years ago. A good rule of thumb is to find homes that have sold within the last 6 months.

Additional tips for finding real estate comparables

Now that you’re familiar with the most common ways to find real estate comps, here are a few more suggestions in mind when implementing these strategies:

• Visit homes in person. If you’re nearby, it can be extremely helpful to drive past and view the exteriors of comparable homes you’re evaluating in person. While an inside tour may not be possible, just an outside look can help you determine an even more accurate market value.
• Limit comps to similar property types. Be cautious when looking at different property types. For example, comparing a single-family home to a condo or a multifamily rental property can be difficult. Try to keep your comps to the same type of property and properties with similar characteristics.
• Find more than one comparable property. It’s best to use three to five comps when determining a home’s value. The more sources you use for comps, the more accurate the comps will be. If multiple sources estimate a particular comp at a similar value, you’re likely to make a more accurate assessment.

The bottom line: Comparables in real estate help to accurately price a home

Determining a home’s value depends on several factors like location, market trends, seasonality, and especially real estate comps. Comparables help buyers, sellers, agents, and appraisers assess fair market value by comparing recently sold homes with similar features such as size, condition, age, and neighborhood. If you’re a new or seasoned home buyer and have been researching comps, your next step may be a Rocket Mortgage application.

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