Factors Impacting Comparables In Real Estate
Whether you’re a real estate professional, an eager home buyer or a seller pulling comps, you’ll want to keep some of a property’s key features in mind.
Location
You may have heard the old real estate adage that goes like this: “location, location, location.” Well, it’s an old adage because it’s pretty accurate. A 500-square-foot apartment in parts of New York City can be 10 times as expensive as a 5,000-square-foot house in the middle of the country. The differences aren’t always quite that stark, but you no doubt get the idea.
Typically, optimal comps are no further than one mile from the property, but the exact distance will depend on your area (rural, suburban, urban, etc.).
Condition
How well-built and well-maintained a home can be critical to the home’s comparable value. For instance, you might find a significant price difference between a home with a leaking roof and a home with a brand-new roof. When running comps, be sure to take into account the condition of all parts of the homes you’re comparing.
Age
A home’s age will have a major impact on its value and influence other factors that affect real estate comps–especially a home’s condition. New homes tend to have higher value, so a home built in 1980 and one built in 2015 may not have similar values just because they feature the same number of bathrooms and bedrooms.
Number Of Rooms
A four-bed, two-bath house may seem like a pretty close comp for a three-bed, two-bath home, but that’s not necessarily true. That extra bedroom can often mean a price difference of $100,000 or more. Don’t forget to factor in size, too, since square footage can significantly impact home value.
Lot Size
Acreage value varies by location but, all other factors being equal, more land means more value. Even if the houses are pretty comparable, if one sits on two acres and the other sits on 10 acres, you need to note this when determining the value of both properties. This is especially true for location. A large lot near a popular urban center could be significantly more valuable than a rural plot of land the same size.
Time Frame
When looking at recent sales in the area to determine the value of the home, recency is a pivotal consideration. Comparing your potential home to a house that sold a month ago is going to be much more accurate than looking at one that sold 2 years ago. Your best bet is to find homes that have sold within the last 6 months.
