I read a post the other day that said an agent told another agent that "comps aren't worth crap today". I started to write everything I thought in a comment - but decided it was worth making into a post.
As a Realtor whose Broker is also an Appraiser - I can say without hesitation - in determining the value of your house or property - Comps are Crucial today. Although they are often Crap. :-)
Listing agents often don't fill out the information they enter into the MLS correctly or fully. I can't tell you the number of times we're nearing the end of an appraisal and inputting the final data when we come to one of our comps and find that critical information was left blank. And then we can't get hold of the agent to ask them for the information we need. So - speaking from my Broker's Appraisal perspective - and really, even from my CMA perspective - PLEASE fill in your listing fully when you load it into the MLS. It only takes you a second to type it in - it could takes us a lot longer to research it later if you leave it out.
Speaking from a Realtor point of view - comps are absolutely crucial in the buying and selling process. Banks do appraisals to determine the value of a property - and therefore the highest amount a mortgage can be written for that particular property. They get that determination from comps. If there are no comps - there may be no mortgage.
Seller agents who don't use comps to help determine the value for the listing price of a property are running a huge risk unless their buyers have pockets full of cash and don't need a mortgage. Case in point - we had a seller recently who had a buyer willing to purchase their property for the asking price the seller had chosen. Then a comp search was done to determine the value a bank might come up with for the property - and the answer was considerably less than the asking price. It did not matter that the buyer was in full agreement with the seller as to the value of the property or that he was happily willing to still pay the full listing price. They needed a mortgage to do so - and banks decisions are based on the appraisal amount - not on the price the buyer is willing to spend.
In another situation, if a property is so unique there are no comps available for it - the banks can't even determine what the value of the property should be. There again - unless you have a buyer with a pocketful of cash - you may not be able to make a sale.
A wise listing agent will not only see the value of the comps for themselves. They will do well to help their sellers and buyers fully understand the comparable sales process right from the start - so there are no heartbreaking surprises at the end.
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