What are "Comps" and How are They Used to Determine Value:
Checking comparable sales is the most accurate and used method
to finding out what an actual property is worth. Your local
government website may have information on sold properties in
the area you want. Many county courthouses and tax assessor’s
offices have searchable databases for your use. There are also
subscriber websites such as Electronic Appraiser which can give
you more data. The Zillow website offers data on the property
but the information is less accurate and not as detailed as
other sites. For example if the seller’s name was missing, it
might be because a bank owned the property. A foreclosure
typically should not be used as a comparable sale because the
banks take large losses to get rid of their property. Be weary
of websites that offer computer-generated valuation as these
methods can be off as much as 10% and sometimes much more. You
should be able to get the value close to 3% with some research.
The best source for getting information about comparable
properties is through the local MLS. To get this information
which also includes days on the market and whether the seller
offered concessions and other information, asking a real estate
agent is the best way to go as they can provide it to you for
free. Many MLS’ will also allow you to buy this information as a
subscription. Real estate agents can get information the general
public does not have access to.
When you are comparing properties by using “comps” also known as
comparables, location is most important. An appraiser usually
looks at houses within a 1 mile radius. Also located on the
water or by a park may add value to your property. Square
footage of home is also very important. Compare the homes that
are within 20% of the size homes are interested in. Other things
to consider when looking at comps are the number of bedrooms and
bathrooms, the age of the property, the size of the lot, as well
as the condition of the property. The number of bedrooms and
bathroom can be more important than the actual square footage.
For example a two bedroom home that is 1300 square feet most
likely will not be as valuable as a three bedroom home that is
1250 square feet. Where the bedrooms are located can also be
important. A bedroom in the basement may not be as valuable as a
bedroom on the ground floor. A home with more than 5 bedrooms
does not have a greater value over a home with 4 bedrooms given
the square feet is the same. A home with 2 bathrooms has a lot
more value than a home with one bathroom. However a home with
three bathrooms does not have much more value than the home with
two. A full bathroom includes a shower, bath, toilet, and sink.
A three-quarter bath has a shower, toilet and sink. A half bath
has a toilet and sink but no tub or shower. A three-quarter bath
would not lose much value over a full bath as long as there was
a least one full bath in the house. The number of garages can
also affect value especially with condo’s or areas where there
is not enough street parking. However, a four car garage may not
have much more value than a three car garage. There are many
factors to look at when determining the value of a home. A
knowledgeable real estate agent can be very helpful in
determining the value of a property.
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