House prices fluctuate often, which might leave you wondering if you’re going to be paying a fair price for your new home. There are several ways to get an estimate for yourself, but remember – the most accurate information will come from a real estate agent!
Comparable sales, also called “comps,” are homes that have recently sold and have similarities to the one you’re interested in purchasing. They are comparable in many regards, most often in location, square footage, and condition. Real estate agents and sellers use comps to determine what a fair listing price will be for their home before they put it on the market. The goal with this process is to determine a price that will simultaneously attract buyers, help the home sell quickly, and create a smooth experience for all parties involved.
Using Comps as a Buyer
If you want to purchase a home, your real estate agent will find comps that are similar to the one you’re interested in. This will help you determine what you’re comfortable offering. Knowing comp prices helps buyers like you know they’re receiving a fair price for the home and its amenities.
Finding Real Estate Comps
Multiple Listing Service
Real estate agents can find accurate comps with their local MLS (multiple listing service) technology. Working with an agent that’s familiar with your desired neighborhood is important, because they’ll be able to decipher correct and fair prices more easily. They’ll also be able to explain why a home is listed the way it is and give their professional opinion on whether or not it’s priced accurately.
Real Estate Marketplace Websites
Websites like Zillow and Trulia show prices for several homes in your area recently sold or currently on the market. They’re quick resources for initial research and baseline knowledge, but are not always entirely accurate. You can filter by zip code, number of beds and baths, and more to narrow down results. Zillow also shows “For Sale By Owner” listings that are not included in MLS.
Zillow offers a pricing tool where you can search an address and bring up recent sales nearby. You can find comparable homes by narrowing the search to only include features similar to the home you’re interested in purchasing. With the filters, Zillow will even calculate a price for your home.
Narrowing Down Your Search
When searching for comps, be sure to follow these guidelines to find the best matches.
- Location: Stay within a half-mile of your home.
- Time: Narrow the results to homes sold in the last three to six months.
- Square footage: Comparable comps should be within 300 square feet of your home’s square footage.
- Nearby amenities: It’s important to look at walkability, views, access to public transportation, nearby schools, and shopping.
- Age: Finding homes built in the same year will give you the most reliable comps. The age of the home suggests the condition of other things in the home like plumbing, HVAC, etc.
- Bedrooms/Bathrooms: Only compare homes with the same number of beds and baths.
Even with all this information, comps can be hard to interpret. If you’re ever unsure about a price, contact us to learn more. NCJ Real Estate has been helping clients buy or sell in Richmond for years.