How to Research Real Estate Comps
Comparable properties or "comps" are a key tool for real estate agents and property owners preparing to list a structure for sale. These data help by showing what similar properties are worth, allowing for the development of a fair listing price that is likely to appeal to potential buyers.Posted — Updated
A number of factors go into the evaluation of a home to identify comparable properties. When looking for a basis of comparison, property type is obviously key; it needs to be defined as commercial, residential, or industrial, with a consideration of subtype. A duplex is very different from a single family home, for instance, while a standalone business with a residential apartment above is not the same thing as a strip mall.
Another consideration is location; a home in the fashionable Pacific Heights district of San Franciso cannot be compared to another in the down-at-hell Tenderloin, because the two neighborhoods are so different. While both homes may be similar in terms of square footage, number of bedrooms, and other factors, their locations have an impact on their value. Simply being located in San Francisco is not enough.
You can also look up recent property sales, which are a matter of public record. Historically, this required going to a records office to look them up, but today you can often do it online. Records offices sometimes host this data online, or you can find it on private websites, which allow you to narrow results by type of property, location, and features. This can allow you to generate a useful list of sold property to see what sold, when, and for how much. These data are crucial for tracking market trends and identifying more comparable properties.
With this information in hand, you can make a better assessment of how much you should ask for your own property, though it can help to consult a real estate agent and a skilled property assessor. You can also use comps in your own house search and price negotiations. If you are interested in a home but feel the owners are asking too much, don't be afraid to furnish your research data as part of your argument when you make an offer below the listing price.