Let me guess – you don’t know what a “Comp” is. You’re in good company. Many Realtors use the word but never explain what it means.
“Comp” is short for “Competitive Market Analysis”. Also known as a CMA, it’s what we Realtors use to help you decide what the true market value of your home is.
The way most experienced Realtors generate a CMA is to compare your house to similar homes in the area. We look at similar homes that are for sale and that have sold in the past 6 month period. Here’s an example. You’re ready to sell your townhouse. It has 3 bedrooms on 2 levels with a 1 car garage. The home has about 1800 square feet. Your Realtor should be looking for 3 bedroom condo with a garage and 1500 to 200 square foot. Hopefully there are enough sales in your condo complex to make a valid comparison.
But you may have seen where some web site is offering a free computer generated estimate of the value. Beware – a computer cannot generate a valid Market Analysis. The computer will look at all sales within a certain distance. It will than add all the sale prices and then divide the sum by the number of sales. But what if next to your complex there’s a development with 4000 plus square foot homes, and three have recently sold? That will inflate the computer generated value of your home.
Do yourself a favor. Hire a Realtor who is experienced in your area to help you determine what a ready, willing and able buyer would pay for your home. Because what that buyer will pay is the only true measure of your home’s value.