Whether you are buying an investment property or selling an investment property, there’s one thing you must learn and that’s how to find real estate comps. Finding comps in real estate is key to making a wise investment decision and maximizing your return on investment.
So, What Are Real Estate Comps?
Short for real estate comparables, real estate comps are properties that are very similar to the property you are thinking of buying or selling. Analyzing comps will help you determine a competitive and appropriate asking price or offer.
Real estate comps should be similar to the property in terms of:
- Location (in the same neighborhood within a radius of 3 miles)
- Square footage (inside and outside)
- Number of bathroom and bedrooms
- Amenities (swimming pool, walk-in closets, high-end finishes, etc.)
- The timeframe of sale (focus on homes sold within the last 3-6 months)
- Condition (distressed, newly renovated, etc.)
- Age of property
- Type of property (single family home, apartment, multi family home, condo, etc.)
- Neighborhood features (walkability, crime rate, access to amenities, views, etc.)
Who Benefits from Real Estate Comps?
Real estate comps help a wide range of players in the industry make better real estate investment decisions. This includes:
- Home sellers – Many sellers don’t have any idea what their property is worth. As a result, they might end up overpricing or under-pricing their home. Analyzing real estate sales comps provides sellers with a more objective method of establishing an accurate listing price for theirproperty.
- Homebuyers/Real estate investors – By analyzing what other buyers have paid for similar investment properties in the last few months, buyers will have an idea of how much they should offer for a home. This way, they can avoid paying more than what the property is worth or making a very low offer which will be rejected by the seller.
- Appraisers – When coming up with a property valuation, appraisers will review public records, inspect the home, and analyze real estate comps. The comps show appraisers what buyers have paid for similar properties in the neighborhood recently.
- Real estate agents – Agents use the multiple listing service (MLS) to find real estate comps and then use the data to conduct a comparative market analysis (also referred to as a real estate market analysis).
Related: Real Estate Market Analysis vs Home Appraisal: What’s the Difference?
4 Ways to Find Real Estate Comps
Wondering where to find real estate comps? Learning how to find real estate comps in your area is crucial for your success as a real estate investor. Here are some ideas to consider:
Check public records
Many counties keep up to date records of the sale prices of properties, and this can be very helpful when you are looking for real estate comps. All you need to do is get in touch with your county office to find out how these records can be accessed. Some might require you to make a visit in-person, while others will have the records available online. Preferably, you should have between 8-12 real estate comps which you will use to make price comparisons.
Work with a realtor
Whether you are a beginner or an experienced real estate investor, it would be a good idea to work with an experienced real estate agent. Licensed agents have access to the multiple listing service (MLS). This is a database with comprehensive spreadsheets on properties that have recently been sold, as well as those that are still for sale in the US housing market. Your agent will explore the recently sold homes that are similar to what you are interested in buying or selling. Besides pulling comps and helping determine your home value, the agent will also come in handy during the negotiation and closing stages. You can find a real estate agent anywhere in the US here.
Related: How to Find a Real Estate Agent Near Me?
Use real estate investment software
Real estate technology has advanced greatly over the past few years. There are now numerous tools in the market that investors can use for any stage of the process. The best site for real estate comps is Mashvisor.
Mashvisor’s investment property calculator is a tool that makes finding real estate comps easy. Also referred to as the rental property calculator, this real estate comps app uses big data and predictive analytics to put together a comprehensive list of Airbnb comps and real estate comps for any listing. Mashvisor even provides real estate comps for your neighborhood. Within minutes, you will be able to do your own comps and generate results that would take you weeks if you conducted real estate comps analysis in the traditional way.
With Mashvisor, you can get an auto-generated list of real estate comps for every listing.
Besides helping you quickly find the current market value, the rental property calculator will also analyze the income property, providing accurate estimates of the expected startup costs, rental income, cash on cash return, cap rate, and cash flow. In addition, this real estate comps software will suggest the best rental strategy (traditional or Airbnb) for your property.
Related: Why an Investment Property Calculator Is Better Than Spreadsheets
Get a home appraisal
Getting a home appraisal is another easy way of finding real estate comps. An experienced real estate appraiser that is familiar with the neighborhood where you want to buy an investment property will be the best person for the job. The appraiser will carry out a thorough analysis of a property’s features, and then compare it to similarproperties in the neighborhood that have been sold in recent months. This will help you determine the fair market value of the home you are interested in.
However, you need to note that a home appraisal can be very costly. The bigger the property is, the more you might have to pay for an appraisal. For example, a single family home appraisal could cost about $300 to $400.
Conclusion
Anyone can learn how to find real estate comps. From appraisers and agents to public records and software, there are numerous strategies you can use. However, to be safe, it would be advisable to get comps from several sources. This way, you will have a complete picture of a home before you make any decision. Focus on the methods that will save you valuable time and money.
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