How does an appraiser choose comps?
In short, finding comps involves looking for recent sales of houses as much like your own property as possible, then comparing your home to them and adjusting your price to account for the differences.
What are real estate comps based on?
Comparables (comps) are used in valuations where a recently sold asset is used to determine the value of a similar asset. Comparables, often used in real estate to find the fair value of a home, are a list of recent asset sales that reflect the characteristics of the asset an owner is looking to sell.
Are real estate comps accurate?
Buyers can—and should—offer more or less money for the house based on something called real estate comps, short for “comparables.” … Using comps to determine a home’s valuation is not entirely a science, but there are some signs your real estate comps are not accurate.
What is the radius for comps when selling a house?
When pulling MLS comps, agents typically search for listings that are similar in size, condition, features, and age. These listings are ideally sold within the past six months and within a one-mile radius. In rural areas where distances from property to property tend to increase, a five-mile radius is acceptable.
What happens if an appraiser Cannot find comps?
If the appraiser isn’t able to find a single comparable property, you’ll likely struggle to move forward with a mortgage on that site. Some lenders may be able to proceed on a case-by-case basis with a single comparable. Having at least two good comps should help you breathe a bit easier.
How many miles can an appraiser go for comps?
Comps should ideally be within one mile of the subject property, and not over any major barriers like a freeway, a river or railroad tracks. Comps need to be in the same city as the subject property in most cases, even if a comp in another city is less than a block from the subject property.
How are comps calculated?
Comps are typically determined by comparing the property in question to other properties within a 1-mile radius, which have sold within the last year and have similar attributes (such as the same number of bedrooms, age, subdivision, square footage, etc).
What do comps tell you?
Comps, an abbreviation of “comparable sales,” are used to determine a home’s fair market value through the sales comparison approach to pricing property. … According to this principle, you can figure out the value of a home by finding out how much it would cost to purchase a similar, equally desirable property.
What makes a house comparable?
“Comps,” or comparable sales, is a term anyone on either side of a real estate transaction should know well. It refers to homes located in the same area and very similar in size, condition and features as the home you are trying to buy or sell.
How important are real estate comps?
The dominant reason why comps are so important is pricing. Appraisers provide market value information to lenders. … Appraisers and agents want a good supply of comps in order to select the best. Both professionals have reason to find good comps, so it’s in the buyer and seller’s best interest to trust their assessment.