Appraisals comps are typically determined by comparing the subject property to others that have sold recently within a 1-mile radius. The property will have similar attributes such as age, subdivision, square footage, layout, etc.
Running your own comps as a homeowner can be a tremendous tool for information on the value of your home. However, the most accurate comps, however, are done by experienced realtors and appraisers who also have access to the complete MLS (Multiple Listing Service)
What are comps in real estate?
Comps are comparable homes in a specific area that a realtor, appraiser, or homeowner uses to assess the value of the subject property. Homeowners who are looking to sell their homes or just want to know a rough estimate of their value. Can use free websites like Zillow and Realtor.com to get the information.
If you’re looking to buy and don’t want to pay too much, finding good comps in the area can help you understand what the home is worth before you make an offer.
The appraiser typically picks at least three recently closed sales as comps in their report. This helps to determine the current market behavior and the value of the property. Active listings or pending sales are also used as a determining factor.
Types of comps in real estate in Texas
As we discussed above, when using comps, you want to use at least three properties to determine value.
Here are the ways properties need to be similar:
- Location: As a general rule the subject property needs to be within 1-mile of the comps. They just need to be as close to the subject as possible.
- Size: The comps should be similar in size. Try to stay within 300 square feet larger or smaller.
- Bedrooms: The number of bedrooms will affect the value, so make sure the comps have a similar amount.
- Age: Homes age over time and comps need to be homes built around the same time. You shouldn’t compare a home built in 2021 to 1985.
- Square feet: Compare similar-sized properties. Don’t compare a 3,000 square foot home to 1,500.
- Appraisers must bracket: Bracketing refers to selecting comparable properties with features that are inferior, similar, and superior to the subject’s features. Most lenders require that appraisers use this method in the appraisal analysis or final report.
Frequently Asked Questions About Appraisal Comps
What is considered a comp in real estate?
These are recently sold homes usually within 6 months that are similar to the property you are interested in.
How many comps are there?
An appraiser typically uses picks at least three recently closed sales as comps in their report. This helps to determine the current market behavior and the value of the property. Active listings or pending sales are also used as a determining factor.
How many comparables should be used for a CMA?
There isn’t a standard amount to use. However, most realtors and appraisers use 3-4 comps when evaluation a property.
How far back should comps go?
An appraiser will use data for homes sold in the past 3 months or 90 days. If there isn’t any data available, they will increase the sales comps in three-month increments.
How important are appraisal comps?
It’s one of a few very important tools used to determine the value of a property. The appraiser uses comps for property evaluations. Realtors use it to price homes based on market trends. The purpose of professionals using comps is to determine the value based on other similar homes. They want to see the trends and data on how much someone is willing to pay for a property.
How long are house comps good for?
Typically, you can expect comps used in an appraisal report to remain valid for anywhere between 60-180 days. If the housing market shifts drastically within that time, then a new appraisal using new market data “comps” is required.
What happens if no comps for appraisal?
If an appraiser doesn’t have comps to help determine the value of the subject property. Then the appraiser can use the cost approach method.
How can I get a house appraised with no comps?
If an appraiser doesn’t have comps, they can use the cost approach method.