Real estate comps: What they are and how to find them

You've got a lot of decisions to make when you plan to buy a home.

From determining your must-have features, to how you’ll make a down payment – the decisions can be dizzying. And one of the most important decisions is how to determine the value of a home. That’s where real estate comps come in.

Real estate comparable sales, or “comps” for short, determine a home’s fair market value using recently sold homes that are similar to the property you plan to buy or sell. Comps will show you the recent sale prices or rental rates of homes that have similar location, size, condition and property to the home you’re buying, selling or renting.

Many parties use real estate comps, including homebuyers, sellers, appraisers, and real estate agents.

Homebuyers can use comps to determine how much to offer for a home by comparing what others have paid in the past few months for similar homes. Buyers can also use comps as a negotiating tactic to achieve a lower price or seller concessions.

Sellers can use comps to decide a listing price if they don’t want to hire an agent to help them sell their homes. Comparable sales can offer an objective way to help sellers price their homes by getting to the root of fair market value. They can also use comps to counter offers made by buyers if they make a low offer.

Appraisers are professionals that are typically hired by a mortgage lender to determine the value of a home when considering a mortgage application. Appraisers can use comps to determine how much area homes have recently sold for, which is the best way to assess the fair market value of a home.

Real estate agents can use comps to run a comparative market analysis (CMA), or a report that compares the home to recently sold properties, which uses comps to estimate fair market value.

Let’s take a look at the steps to finding real estate comps for your home on your own. It’s often a good idea to consult with a real estate agent , but you can search for them on their own.

Real estate listing sites can be really handy. First, type in the address for the property you’re considering or the property you want to sell. You may want to search by date sold to figure out how recently comparable homes sold. You want to stick to listings that have already sold because current listings could change in price.

You can also pursue public property records by visiting your county assessor’s office, which maintains records of all recorded local sales transactions, though you can’t access the asking price of any homes nor any seller concessions or what the seller agrees to pay.

Note: You ideally want to keep comparable homes within a local radius – particularly within the same neighborhood or within one mile, if possible.

Other value-influencing factors can also occur, including market conditions, location differences and other information surrounding the sale.

First, verify the homes you’ve selected really do look like yours by visiting them in person. Take a look at the yard, the exterior of the home, the neighborhood, entertainment venues and walkability to various services. It’s hard to tell whether the amenities compare to your home unless you actually visit the home you’re comparing yours to.

Choose three comps that are the most similar to your property. Comps can help you decide how much you should initially list the property for.

Amid the many considerations when it comes to buying or selling real estate, beyond down payment and neighborhood conditions, real estate comps remain one of the most important components. They can help you pinpoint a listing price and keep you from overpaying for a property.