Homes Comps: Determining Your Home’s Selling Price

What are SOLD comps? Comps mean comparables. Comps are what agents and seller’s use to compare the selling prices of recently sold comparable properties in the surrounding areas. Real estate agents will use these recent sold comps to determine what to list a house for. Agents will do what is called a CMA-Cost Market Analysis. Agents typically do this in the beginning when meeting a seller. It may be part of their listing presentation to tell you what they think they house should be listed for before they would list the house on the MLS-Multiple Listing Service. In today’s market most lenders will ask for more recent comps (3 months or less), some will allow 6 months since last sold. Prior to 2007, lenders often allowed sold comps that were 1 years old. As the market has changed, most lenders have asked that sold comps be as recent as 3 months old or less. Some will allow for 1-2 that are up to 6 months old. Each lender will be different. Also in situations where lenders see that a seller is behind in payments and believe a foreclosure is coming up soon, they will order
3 BPO’s, from 3 different agent/brokers. BPO’s are Broker Price Opinions. These are more like CMA’s without the complete work of an appraisal. The reason is lenders probably want to save the money, plus they want 3 local agents to give their opinion, as the lenders are almost always from another state. Sold comps are best data to find out what your
house will probably sell for.

As a general rule the other properties has to be pretty close to the same house as yours. For example if you have a rambler, the appraiser or agent would compare other ramblers. They would try to stay within a few years of yours, same bedrooms, same garage stall, same square feet “above ground”. You can’t always find exact matches, so the appraiser or agent may make small adjustments to make a more fair comparison. The type of house, year built, condition, sq ft, and bedroom are going to be most of the most important things to compare fairly. Of course if the house is on the lake, you’d have to compare it against other similar lake homes in the area. Please don’t get caught up in the type of trim work, countertops, appliances, etc, that doesn’t make a very big difference when an appraiser or agent compares properties. Some properties just have better curb appeal and curb appeal is something just comes from experience. Curb appeal means it looks good from the street when you drive up to the property from the street, it obviously looks nicer than
the other house that has the same specs on paper. You can try to find sold comps online, but as an agent/broker, I really think the best data is from the MLS, and I would really leave it to an agent.

Typically a buyer is the one that’s going to order an appraisal, usually not the seller. The value of a property is what someone is willing to pay for the property. As of 2008, I would like to be more specific and say it’s what someone will pay, and what a lender’s appraisal review department is willing to accept for a value. A lender’s appraiser will come up with their own value. In markets where prices are going down, a lender typically will want to use more recent comps only 3 months old. If you need to find out your houses value, you can contact me, and I can have my agent associate run a CMA for you before they list your house. If we find out that you owe too much on your house, are behind on payments, we may have you talk to a short sale specialist. Please email me at ron@minnesotainvestors.com.

Please do me a favor and tell just 3 friends today, to subscribe to this daily blog feed by going here:
http://www.minnesotainvestors.com/blog/feed/

BookMark, Email, or Subscribe This Page, Tell Friends!