If you’ve ever bought or sold a home you’ve probably heard this term, but you may not be totally sure what it means. Different real estate professionals have different ideas of what it means, but there are some general guidelines that are utilized to determine its meaning as it pertains to home values.
“Comp” stands for comparables – in other words, houses in the same neighborhood that are similar in size, features, and value to another house for sale in that area. These factors are used to determine market value of the home in question. The most accurate comps are found in condos and planned housing developments. In other locations it’s harder to get completely similar comps because styles and interior condition can vary so much.
When real estate professionals determine comps, they’re looking at aspects like square footage, and the number of bathrooms and bedrooms. They also take into consideration whether other not nearby homes are even in the same school district – because these dividing lines can run directly between houses, this can make a huge difference in the value of two very similar homes.
A high ratio of short sales and foreclosures in a neighborhood can also affect the value of a house for sale. If you’re thinking about selling your home, it’s wise to get at least a loose grasp on the comps around you – this can help you determine the value of your own home.