How to run comparables for the listing price and hopefully the selling price of a home is more challenging than it sounds. The real estate industry has brokers and MLS trainers teaching classes how run comps. Yet, my motto on running comps is similar to the comp methods that industry Russell Shaw equated. His motto, as well as mine, is that comps were independently determined. Over the past five years I’ve tracked my sales, during this time my comps have been about 95% accurate.
KEY FACTORS IN WHAT MAKES A COMP COMPARABLE
I follow the same method every time I list a house. The first thing I do is I look through the tax records. I look at who the owner is, when they bought the house and other major qualifications that determine the price of the house. First and foremost, the neighborhood the house is built in is a major qualification. Neighborhoods are like families and families have characteristics. For example you have characteristics of your mother and your father, therefore those characteristics are undeniably a part of who you are and houses are very similar to this. Houses in a neighborhood are typically all built by the same builder within a couple years, so all the ACs are about the same age, all the roofs are about the same age and other features will be the same within the neighborhood.
One of the biggest determination when running comps for a house, is also one that is most commonly misused, that is the appreciation of the house since it last sold. There are too many factors of the house and the neighborhood that may have changed during the time it last sold to use the appreciation.
The next major qualification I look for is how many levels the house has. The selling price varies significantly between one level and two level houses. I don’t think it’s ever a good idea to use a two level comp for a one level house and vice versa.
Another determining factor is lot size. Whether the house has a pool or no pool is also important. Lastly, I look at square footage.
THE MOST DIFFICULT PART
The most difficlut part in running comps can be looking at the best house that sold, then looking and the quality of the upgrades and the trendiest of the upgrades. The top spaces to look for upgrades are first the kitchen, then the master bath, then the outdoor space and flooring. How do all of these compare to the house you are running comps for?
Hopefully using these parameters will narrow down your search to somewhere between five and fifteen homes to give you the most accurate comparable.