4 Questions to Ask Yourself When Searching for Comps
- March 30th, 2016
- Matt Frentheway
- No comments
As a REALTOR® preparing to determine a list price for your client, you might be gathering information to present to the appraiser as well. If so, you’re probably hoping that all your research won’t go to waste and that the comps (comparables) you come up with will be used in the valuation of the property. After all, you’re trying to get the process started as quickly as possible. Nobody wants to waste time on inaccurate research.
There are a few questions you can ask yourself when gathering comps to make sure they represent the most accurate information.
1. Do I have accurate measurements?
The best thing to do is to measure the property yourself. Never rely solely on tax records
or other public documents to determine square footage. These numbers are usually not accurate. Ensuring that you have the proper measurements will not only get your market value closer to the appraiser’s, it will also help to ensure that your comps are taken into consideration.
2. How Recent Are the Sales I am Using for Comparison?
The sales in the area from a year ago may look a lot better than a sale 3 months ago, and it can be tempting to use those numbers, especially if there were more prior sales to go by. But the real estate market fluctuates far too much to use out-of-date sales as comps.
3. Am I Using Comps from the Right Neighborhood?
If you’re selling in a larger community, you might not be familiar with every neighborhood and how comparable the markets are. Deciding to use comps from a similar neighborhood may come back to bite you later if you haven’t done your homework. It’s best to stick within the immediate surroundings and school districts to determine market value. If that is not available, consider enlisting the help of an appraiser early on to find a matching area.
4. Are my Estimates Unbiased?
The entire reason appraisers exist is so that market value is determined by an unbiased third party. As a REALTOR®, it’s entirely too easy to start the process with a listing price in mind.
We get it. You’re an experienced professional and sometimes it’s too easy to feel that you already know what the property should be valued at. But try to be objective and start looking for comps before you estimate a selling price. Doing it this way will almost certainly ensure more accurate data.
Always set your criteria before searching for comps. Knowing ahead of time where you will get your information and what data you will not accept will save you tons of hassle in the long run and give you a more accurate listing price.
If you’re unsure of your numbers, you can always turn to the appraiser with basic questions. You should consider him or her part of your team. You’re both working together to ensure a smooth transaction for both the buyer and the seller.