Understanding the lingo - comps
So, you're selling your home and every single Texas REALTOR® you interviewed to list your home has mentioned "pulling comps". Not wanting to appear uniformed, you just nodded your head and played along.
So what is a comp? Simply put, a comp, short for comparable, is the primary set of data used in determining the value of your home. Comps give you data from all the recently sold property in your neighborhood. Some of the different data you see might be the age of the house, the square footage, and most importantly, price. Your Texas REALTOR® may use these data to create a Comparative Market Analysis for you.
In any real estate market, the more recent a comp, the more accurate it is. Obviously, the availability of recent comps depends on how active the market has been in your area.
Generally speaking, the most significant comps are those that are closest to your address. This does not account for differences such as one house having a view of the lake, which will add value, or a home backing up to a railroad track, which will detract from the value.
Price per square foot is a significant and well-tested method of comparison, although straight comparison can be deceiving. You can see a big discrepancy if, for instance one property has been neglected and another of exactly the same size, just two doors down, has been well cared for.
Lot size is a factor as well. A 2,400 square foot house on a four-acre lot may sell for quite a bit more than an identical house on a .33-acre lot.
Other factors may include nearby amenities, traffic concerns or access to a main road, landscaping and curb appeal, and the general condition of the exterior of the house-such as the driveway, roof, chimney, or fence.
In the end, it comes down to what the buyer's bank's appraiser says the property is worth. That appraiser may use comps to generate his appraisal, but banks or lenders do not take comps into account when considering the amount to loan the buyer; they will only consider the appraisal.
The point is this-there are many factors to sift through when evaluating comps. If you have questions, your REALTOR® should be able to decipher these data and explain the methods she used in pricing your home.CONTACT TIFFANY SHARKEY OR TONYA PEEK OF THE SHARKEY PEEK GROUP FOR YOUR NORTH DALLAS REAL ESTATE NEEDS 972-977-2254.