Real Estate Comparables
- Part One
What are real estate comparables?
They are homes similar to your home in terms of design, appeal, quality, square footage, basement and or location that sold in your neighbourhood recently.
There are over 20 different criteria an appraiser will consider when appraising your home.
Here are the four most important criteria when selecting real estate comparables
This refers to the distance your home is from comparable sales or sold homes.
What homes make up your neighbourhood?
Which school district is your home located in?
The appraiser will want to locate comparable sales within ½ mile from your home if you are located within the city. If your home is located in a suburban area on the outskirts of town the appraiser will want comparable sales that are within 1 mile from your home.
In some cases the appraiser will not be able to find a comparable sales within the desired distance. If this is the case the appraiser will either select two or so sales that support the area and two outside the area to lend support to the design and appeal or other important factors.
Location can also refer to where your home is located. If your home backs to a major lake or river this might impact values significantly. If your home backs on to a railroad track or transmission tower, this will impact your value negatively.
The appraiser will try to locate real estate comparables for sales that offer similar locations.
2). Design and Appeal:
The appraiser will locate homes that are of similar design and appeal to your home.
For example if your home is a 1 story home with three bedrooms, two bathrooms and a two car garage the appraiser will look for comparable sales that compare to your home.
If your home is a custom three story home the appraiser will attempt to locate at least two custom three story homes in your area to compare to your home. Many times if your home is unique in design, the appraiser will have to go outside the immediate area to provide support for homes like yours.
3). Square Footage:
The size of your home will be compared to other homes in your area.
If your home is the smallest homes or the larger home in the area then the appraiser will usually locate one or two comparable that support the typical home in the market area and one or two comparable sales if available, that support the square footage of your home.
If your size of home cannot be found in your area then the appraiser will try to find a home that is outside the immediate market area.
4). Lot Size:
Lot size can be tricky if it’s not located in a standard subdivision neighbourhood.
Sometimes, I’ve seen homes that offer larger lot sizes however they don’t conform to the neighbourhood. In other words one large lot surrounded by regular lot sizes so there are no other sales of larger lots in the immediate market area.
There are however plenty of comparable sales of similar style and age homes. When this happens the appraiser will use comparable sales in the immediate area to support the design and appeal and the square footage and will make the final decision if your lot size plays an important part in the final home value.
Land can sometimes offer differing sizes but offer similar functionality.
For example you have two lots. One lot 5,000 square feet but has a buildable area of 3,000 square feet. It is a flat level lot however the lot across the street offers a 10,000 square foot lot and has a buildable area of 3,000 square feet.
Most of this lot is on a hill, pure rocks and hard to build on. In this example the person who purchases the larger lot might have paid more with no more benefit of a larger lot.
How do real estate appraisers find real estate comparables?
Real estate appraisers will log into a database with all of the sales of homes in your area.
Once they have logged into this database they will select the homes that are most similar to your home.
Unlike Realtors that use the multiple Listing Service (MLS) database to find real estate comparables for your home most appraisers use a different database to determine the value of your home.
The MLS is a database of homes that are listed for sale and sold in your area. Other real estate comparable sales can be found via free public websites and free on-line databases however appraisers and or realtors will not use these sites because they do not have enough accessible information regarding the condition and quality of the property.
Selecting real estate comparables can be tricky at times.
The appraiser will look at your home to determine what your home is and what your home has to offer the market.
Next, the appraiser will select comparable sales.
If all of this information is to confusing? Don’t worry!
What is your home worth? ....It's never been easier to get answers!
The days of calling your local realtor to find out what your home is worth are quickly fading...
As technology improves we as home owners have better tools we can use to find the value of a property.
Finding real estate comparables is now as easy as entering your address into a form.
Real Estate Comparables Resources:
Free House Value Sites
From Fidelity National Financial, Cyberhomes is fairly full of information. Find comps, get charts, maps, and graphs. This site stands out most with me because of its heat maps and buy/sell indicator charts. You can also refine the value that is determined by adding improvements, correcting square footage, and more.
Eppraisal searches for other similar sold properties in your area and determines a price range for your home. I think the goal of this site is to become a marketing engine for local realtors. To find out what your home is worth for free you just enter your address.
• Property Shark
Property Shark pulls public data on a property, recent sales in your area, sale history, and comparable homes and you don’t need to provide your contact info.
Realtor.com is now allowing you to search for your home's value by showing what houses sold for in your area.
Find the Zestimate of any property's value using comparable sales data in any area. Zillow combines this data with Google maps so you can see what other properties in the area are worth.
Zillow includes property info, charts of property value over time, and value ranges. Zillow lets you refine a property's value like Cyberhomes by adding improvements you’ve made and changing other details about the property that is listed incorrectly. You can also list a property for sale on Zillow.
Real Estate Comparables Part Two: Formula For Comparables
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