I have a realtor on my team, but they are very new.
When you run comps which properties should you reference? Only sold in the past 3 months, 6 months, active listings, pending listing, ect. I live in a large city and can find comps from 50k to 250k for similarily sized and constructed homes.
I would like to know what most Realtors use to determine comps. Thanks
I suppose one way to approach that is what most appraisers do -
Looking at pendings and actives is interesting but they are not real numbers that you can count on. In the case of actives - they are dreams. You don’t know what a pending sold for until it is out of escrow so they are in the same catagory as actives.
In addition, you will have to make ajustments (up and down) when comparing places. If yours has a fireplace and the others don’t, if yours has a pool and the others don’t, etc.
Bovine,
A sale is not necessarily a comp for your property. Your range of $50,000 - $250,000 is absolutely too wide to accurately “estimate” market value for a particular property. An prudent appraiser would never select a sale at $50,000 and then select a $250,000 sale for the same appraisal - one is not an indicator of value. Ask your realtor to select sales from the same neighborhood & consider current listings, properties under contract & even expired listings to develop an opinion of value. I am very big on bedroom count (compare a 2 bedroom with 2 bedroom comps) and good comps are within 10% of the subject’s square footage (gross living area). Look for comps in same school district, general age of subject, similarities in basements, bath count, car storage, lot size and level\degree of modernization. A 50 year old property with extensive updating\modernization may be more comparable to homes in the 5-10 year range than older homes in need of repair\updating. Hope this gives up alittle direction - Mark.
Mark Tracy-
I would think that only sold listings would matter as it does not matter how much you ask for something but what the market has been willing to pay in the previous few months.
I live in a large city and can find comps ranging from under 100k to 200k for homes within 1/2 mile, same bed/baths, same construction,same age and similar sq-ft. Obviously the lower priced properties need much more work than the higher priced homes. My goal is to provide the bank with the comps that meet my low offers.
I guess I can see how pending,canceled and CTG listings can give you a better view of the market. I dont want most of those since they are way over priced. I will note though that I often find those over priced properties removed from the MLS and sold at or near original asking price a few weeks later. Whats going on there?
I just wanted to know what/if any are the standard way agents run comps
Bovine,
With regards to not taking into consideration current listings as opposed to closed sales, what if you ran into a situation like this - the closed sales that have closed over the past 3-6 months are above current (comparable) listings in terms of pricing. What if the current listings have been on the market well over what closed sales experienced over the past year. What could you possibly extract from this data - maybe the market is declining (transitional market)? Learn to use all the data the market throws your way. Having a wide range of value in your market may be a good thing in that you would have an opportunity to provide\select the lowest comps to present to the lender. Some markets have a relatively narrow range of value which makes it hard to plead a case for a low value. Not sure what is going on with expired listings that appear overpriced and expire and then sold. I would ask your realtor to make a few phone calls to find out whats going on. Mark.
Mark Tracy
Having that wide range of comps has sort of bitten me in the butt. One lender told me that they could not get a good idea of values since I had my realtor include comps ranging from 160k- 200k. These were all well under what the property is worth so I had them included.
I still wonder what is up with these homes being listed on the MLS for months, then selling at listing price right after they are removed from the MLS.
Bovine,
The wide range of value on the comps you submitted to the lender was one of my initial points - wide range of pricing of sold comparables does not provide a supportable estimate of value. You might want to try to filter through the sales you have available and only submit the comps that support the value you feel the property is worth (example: $100,000 value of subject - submit sales in the 90,000 to $110,000 pricing range). This gives the reader a better impression or comfort level in the value of the subject property. Providing a sale at $55,000 and another at $145,000 does not lend support to a supportable estimate of value. Hope this helps a bit. Mark.
I see this happen in our area from time to time. The reason is most often that the MLS limits a listing to 90 days. If the house goes under contract and is likely to close the agent probably has forgotten all about the status they set on the property 70 days ago and then the property goes “expired” in the MLS. The property would still close regardless of the MLS status.
I don’t know if the MLS has a similar rule there. If so then that could be the cause.