What are Real Estate Comps?

24 Hour Property Appraisal Emulations

What are Real Estate Comps?

Comparables

You’ve probably heard the word comps numerous times in and around various real estate circles and we guess, you finally decided to look it up. So let’s explain what they are and who uses them.

Real estate comps is short for real estate comparables. Comparables (comps for short) are properties that have recently sold and share similar characteristics and features to one particular property (called a subject property).  Real estate agents, appraisers, and services like USHomeValue.com, will use real estate comps to perform a price comparison, also known as a comparative market analysis (or CMA for short).

The Closer, the Better

It’s important for comps to not only share similar traits, but they should also come from the same area as the subject property that is being estimated.

For example: if one is looking at buying or selling a 1,200 sq ft house, then it would be important for comps to be roughly the same size and situated as close as possible to the subject property that have sold or gone under contract within the past few months. Ideally, comps should be located in the same neighborhood, but that’s not always possible, especially if the subject property is unique or local market conditions are slow. Therefore, real estate comps can sometimes be miles away and may have sold many months ago.

The Best Tool in Real Estate

Even though comps may not always be ideal, it’s the best tool in the real estate industry to provide desperately needed context for a proper price comparison and ultimate valuation. If you intend on buying a house, good real estate comps can assist you in determining how much to offer. And should you consider selling a house one day, real estate comps can help you decide on setting a sales price.

So the next time you hear the phrase real estate comps, you’ll know exactly what it means and why it’s an important topic of discussion and analysis for buying or selling real estate.