What makes real estate comps inaccurate? 

On Behalf of | Oct 10, 2022 | Residential Real Estate

When buying and selling real estate, comps are very important. These are used to determine the value of the property. Essentially, you just find comparable properties that have sold, you look at the market value for those properties, and you use it to set the value on your own.

For instance, if you bought your house for $200,000 right around the same time your neighbor did, and they just sold their house for $400,000, that’s a pretty good indicator that your home has doubled in value. But it doesn’t have to be your neighbor for you to get this information. When you list, the real estate agent will help you look at comps from the area.

One problem that you can have is if these camps are inaccurate. Here are a few ways that could happen:

They were too long ago

First and foremost, these home sales have to be recent. If they happened months ago or years ago, they’re no longer relevant at all to the current market.

They’re too far away

Another potential problem is when the comps aren’t actually that close to you. The type of town that you live in plays a role. In a rural town, for instance, a home that is two miles away could be considered close. In the city, that would be an entirely different neighborhood with completely different comps. It’s not close at all.

The homes haven’t sold yet

Finally, the homes need to have sold to count as comps. You can’t take the amount that someone else lists their home for as an accurate representation of what they will actually get in the sale. It could be much lower or higher.

Selling or buying a house can get complicated, so just make sure you know about all of the legal steps you can take and the options you have.