The Fundamentals of Comping

Mastering the art of property comparison, sets you apart in the real estate industry and understanding what steps to take when identifying comps is pivotal. 

What steps should I take to start comping? 

Step 1: Evaluate the subject property – note details such as size, features condition, recent updates, and location.

Step 2 : Select comps that closely resemble the subject property – They should be similar in size, location, condition, and features. The choice of comps depends on your goals—whether estimating After Repair Value (ARV) for renovation or assessing current market value for listing.

Step 3 : Comparing these properties to estimate the subject property’s value. This involves calculating the average price per square foot of your comps and multiplying it by the subject property’s square footage. 

Understanding the rules for selecting comps is critical. To ensure accuracy, adhere to guidelines such as using sales data from the past six months and choosing comps with similar characteristics. Adjustments may be necessary for differences in property features or location.

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What rules should I be mindful of when comparing properties?

The importance of accurate comparables (comps) in determining property value cannot be overstated. Using Jamil Damji’s appraisal rules can ensure confident comping. 

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Key guidelines include:

1. Recently Sold Comps: Prefer comps from properties sold within the past 6 months to reflect current market trends. Active or pending listings provide insight but aren’t ideal for valuation purposes.
2. Similar in Location & Characteristics: Comp properties should closely resemble the subject property in size, layout, condition, and features. Consider factors like subdivision, year built, and number of levels.
3. Making Adjustments: If comps differ in bedrooms, bathrooms, or specific features, adjustments may be necessary to accurately value the subject property. Factors like location relative to traffic or commercial areas also warrant consideration.

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What tools will help me comp effectively?

When you’re ready to start comping, leveraging the right tools provide essential resources to streamline your comping process and enhance your decision-making in real estate transactions. This includes:

1. Local county assessor websites for property sales, assessments, and tax data
2. Online Real Estate Platforms (e.g., Zillow, Redfin, Realtor.com) for property listings, sales data, and market trends
3. BatchLeads, an integrated real estate software for lead generation, property analysis, and generating detailed comp reports

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In summary

• Familiarize yourself with the details of your subject property and how other nearby homes compare to determine the subject’s estimated value
• Follow guidelines to ensure you’re finding properties that do indeed compare to your subject property
• Utilize tools and resources that help you comp quickly and effectively