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Health & Fitness

Good Comp Bad Comp

When first going to a listing appointment Realtor's speak a lot about "Comps" but what are they exactly? “Comp” is short for “Comparable” which help determine the listing price of a home.

A “good comp” will have several characteristics.

  1. The comp should be in the same general area.  Remember, location, location, location are the three most important things driving value in real estate. A comp should be in the same zip code and, if possible, general vicinity, of your home.
  2. It will be a similar property.  If I am trying to determine the value of a three bedroom town home with garage then I don't compare the sales of any single family home. The comp should also be similar in size.  If your property has 2,500 square feet of finished space, it can't be compared to the home that is 5000 square feet finished space.
  3. The comp should have other similar features and upgrades if possible.  These could include items like a two car garage, a similar sized lot, fireplaces, deck,  pool, etc. Does your home have new windows, kitchen and roof, but the other home that sold did not? It still might be considered a comp, but the list price of your home should be adjusted for those upgrades.
  4. The comps should be similar in age and condition.  Newer homes in an older neighborhood may be selling for a higher price than the older homes.  Further, the property’s condition will also make a difference.  I look for comparable properties that are in a similar condition.
  5. The style of the home should be similar. A colonial single family home doesn't always compare to a contemporary home in the same neighborhood. Maybe contemporary homes are few and far between and therefore sell for more because of the higher demand?
  6. The comps should have been sold fairly recently.  Within the past 90 days is best but really no more than 6 months.  The market can change quite a bit in that short period of time. Just take a look at the Northern Virginia area! We've seen a great shift in the housing market since 2013 started due to low interest rates and low inventory.
  7. The best comps are those which are so called “normal" or "standard" sales.  That is a sale between a willing seller and a willing buyer.  The seller should be non-distressed, that is, the seller should not be a foreclosure or short sale. The best comps are those that are between a non-distressed buyer and seller on the open market.

Okay, so those are some basic aspects to what a comp is. It can actually be difficult finding comps. The only recent sales may be foreclosure or short sales, your property may be very unique or there may not be any recent sales at all.  These situations make valuations much more difficult but never impossible.

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Make sure when listing your home you ask your Realtor to show and explain the comps before deciding on a list price. It's okay to ask questions. If you're thinking of listing your home for sale I'd love to speak with you, and yes, we can discuss your home's "comps".

Ellen Moyer, RE/MAX Allegiance   www.ellenmoyer.com    ellen.moyer@rmxtalk.com

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