Jeff Adams

Finding the Value of a Home Using Comparable Sales



Posted: Monday, October 26, 2009

by Jeff Adams
RealEstateWebProfits.com

When looking to find the value of a home, investors turn to using comparable sales rates to better assess how much the home in question is worth at the moment. By definition these comparable sales, also referred to as "comps' by those in the real estate business. Comps are sales within similar areas in which the home is located in. These sales feature characteristics that are similar to the subject property and are used for analyzing the appraisal of the home.

Information and statistics that are gathered are used to establish the value of the home in the current market. Buyers use these sales to determine how much they will offer to a seller. Sellers, on the other hand, also use comps to determine how much they should list the home for. Homes that are priced too high, because the seller believes that the home they are putting on the market should be worth more, tend to stay on the market and usually do not sell at all unless there is a price reduction. Homes that are priced more in the same range as the homes that are in similar neighborhoods are typically more appealing to buyers and investors and for the most part are the homes that end up being sold.

Buyers and sellers are not the only ones who use comps. Lenders also rely on comps as they are good indicators of how much the current market value of the home is. It allows them to better calculate loan amounts and interest rates. In addition, appraisers also take advantage of the useful information that comparables provide. These comparable sales are also a part of the appraisal report which lists the homes in the relative vicinity that have sold for similar purchases prices.

Comparable sales offer a multitude of facts and information on any house or property on the market. Different characteristics of comps which are relative to each specific neighborhood are variable, but for the most part pretty much everything an investor would want to know on any given property could be investigated and obtained from comps. Comparable sales rates not only specifically inform on what other homes are selling for in the area of interest and what homes on the current market are selling for but also what condition the home is in and what unique characteristics the home or property has to offer.

There are a variety of locations to find comps, especially online. Some of the more popular websites to visit include Zillow.com, Realquest.com, CyberHomes.com, and RedFin.com. Other highly visited sites to consider are Trulia.com and Realist.com. These sights are all free of charge to visit and navigate and they offer a plethora of useful information in addition to comps. Other sources that may require a specific fee for the use of their services are ListSource.com and InvestorCompsOnline.com. Comps can also be received from title companies such as First American Title Company.

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