What's a Comp?
A Comp or comparable, is the review of similar properties which recently sold in the area and consideration of how their value is comparable to the value of the subject property Although there are other methods, (discussed below), the comparison method is commonly considered to be the most reliable when the following factors are properly considered and adjustments made.
- Conditions of Sale: Were there motivating factors that affected the price? Foreclosure, Sale between family members, etc.
- Date of sale: The economy is constantly changing and with it the housing market follows suit. When considering a comp, the reviewer needs to consider market trends.
- Location: Many communities can have dramatic differences in price within just a few blocks.
- Physical features: Just like you can't judge a book by its cover, a house can also hold many if its own hidden qualities. The most accurate value estimate takes a careful look inside your home, discovers what makes your home special and makes adjustments accordingly.
Comparables are only one way that a qualified estimator determines value. It’s important to realize that accurate estimated value can also be determined by
- The Cost Method: Looking at the value of the land, determining cost of construction new similar buildings, Calculating in depreciation.
- The Income Approach: Typically used in income generating properties. This approach looks at the revenue that can be generated from a property such as rent and location and then deduct things like operating cost and vacancy. There are specific calculations that can then determine a estimated value.
Comps, on the house, provides complete estimates based on the comparables. In the event you need a complete estimate of value we recommend hiring of a state licensed appraiser. You can get referrals to Appraisers in your area from the agent who prepares your comps report.
