A simple guide to real estate comps and how to find them.
Real estate comps are listings of similar properties in an area with associated pricing, which allow buyers and sellers to determine the value of a property in relation to others in the market in real time. Without comps, there would be no framework for determining what to list a property at or how much to offer. This is especially important, because the price of a three-bedroom house in one market might be dramatically different than that in another. Comps give buyers and sellers a guide to their market and a map to navigate transactions within it.
There are two primary routes to obtain real estate comps in any market. The first step is to hire a broker and the second is to enlist an online site or service.
Using a Broker
Using a real estate broker or agent is one way to obtain full access to the real estate comps for a given transaction as well as advice from a seasoned professional. Brokers have full access to the MLS for their market which means that as their client, so do you. Just as online services offer reports which can help you determine the value of a transaction, so too can a broker offer their advice as a professional with experience in the market in which the transaction lies. The primary benefit to using a broker is that person to person interaction which can provide a sense of stability and security to buyers and sellers looking to make the most of their purchase or sale.
Enlist an Online Service
There are several sites dedicated to real estate which offer free listings of comps based on tax records to visitors and more detailed information to registered users. Although less reliable than true MLS comps obtained through a broker or paid service, sites such as Zillow, Trulia, and Realtor.com can be useful to novice investors or those with a more casual interest who are looking to perform some reconnaissance in a given market.
There are also online sites and services through which you can obtain real estate comps which typically require a paid subscription. The benefits offered through a subscripted service often include more in depth information which can help to inform an investor through services such as risk analysis. Many of these services offer a free-version through which users can access basic services like a lead management system, and trial versions of other services. This allows you, as an investor, to try out the different services and determine which one is most valuable to you before putting money out.
When deciding on a real estate transaction, it is important to have as much information as possible at your disposal. Real estate comps and the detailed analysis of them are key to successful investing. Whether you choose a broker or online service, be sure that it is the right fit for you and your budget.
Image Courtesy Flickr and Maciej Latałło