What the meaning of comparable?
Comparables are homes with similar conditions, same age, sizes, style, and located in the same location. Real estate agents, house buyers, and sellers use comparables when evaluating the true value of properties. This term is also used in other industries where investors use the price of the most recent sold assets to assess the prices of similar assets they want to sell, buy, or recommend.
How do comparables work?
Investors can accurately estimate the market value of a property by using comparables. In real estate, agents usually evaluate the home they are listing or buying for their clients. They do this by comparing the property in question with similar properties in the same area that were recently sold. The following are some of the characteristics to consider.
- The number of bedrooms
- Number of bathrooms
- The sale price
- Condition of the house
- The size of the lot and its condition
- Access to water, public amenities
- Same location
- Age
This information is also used when agents are estimating the fair market value of the properties.
Example of comparables
Let’s assume that you want to sell your house by using a real estate agent. So, you contacted your agent who then came and evaluated the house. After a walkthrough, the agent must estimate the listing price of your house.
To come to a listing price, the agent will pull data of similar houses that were sold in the most recent time usually in less than a year. By examining these prices, the agent will come to a price that your house must be listed for.
The real estate agent then talks to you about his/her estimations. Once you and your broker come to a final number, your house will be listed on the market at that price.
