Do you know what a real estate comp is?
What’s a Real Estate Comp?
I’m going to guess that you don’t know what a “Comp” is. In fact, you’re in good company. That’s because many Realtors use the word but never explain what it means.
“Comp” is an acronym for “Competitive Market Analysis”. In addition, it’s also known as a CMA. It’s a tool that Realtors use to help determine what the true market value of your home is.
The way most experienced Realtors generate a CMA is by comparing your house to similar homes in the area. We look at similar homes in the area that are for sale and that have sold in the past 6 month period. As an example, you’re ready to sell your townhouse. Your home has 3 bedrooms on 2 levels with a 1 car garage. The homes livable area is about 1800 square feet. As a result, your Realtor should be looking for 3 bedroom condos with a garage and 1500 to 200 square foot. And hopefully, there are enough sales in your condo complex to make a valid comparison.
You may have seen where some web site is offering a free computer generated estimate of your home’s value. Beware of these, because a computer cannot generate a valid Market Analysis. You see, the computer will look at all sales within a certain distance of your home. And that distance varies by the density of homes. Next, it will add all the sale prices and then divide the sum by the number of sales. This gives the average sale price of all homes. However, 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, because those are not comparable sales for a real estate comp.
Do yourself a favor. Hire a Realtor who’s experienced in your area to help you determine what a ready, willing and able buyer would pay for your home. Because the only true measure of your home’s value is what that buyer will pay.
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