Comparable Sales and Market Value
Comparable sales are recent sales of similar properties in the nearby neighborhood or in a
similar neighborhoods with similar prices. In short, they are "comparable" to the house you are
buying or selling.
The comparable sales method is the best way to determine market value for 1 to 4 unit
properties. Other methods are available, but they are mostly used for larger apartment
buildings, commercial structures, and agricultural real estate. They don't apply in determining
market value for traditional real estate.
If you're a seller, your listing agent will help you determine your sales price by showing you
some recent comparable sales. If you're a buyer and preparing an offer, your selling agent will
probably show you some comparable sales so you can come up with your offer price. Whether
you are a buyer or seller, you'll have to make adjustments based on the property and any recent
changes in the market..
Agents provide advice, but buyers and sellers make the final decisions..
Realtors excel when anticipating market changes. They have their fingers on the "pulse" of the
market and know what is going on...now. When determining market value, you need an agent.
An appraiser's main role is to justify a market value or purchase price.
Even so, in most cases buyers need to obtain an appraisal to satisfy the lender that the property
is equitable collateral for their loan. Appraisals of 1 to 4 unit homes almost always use the
comparable sales method to justify a purchase price or market value..
Usually, finding comparable sales is not that difficult. For example, if the home is in a housing
tract where most of the homes were built by the same builder, it is usually pretty easy to obtain
comparable sale information. As time goes by and individuals modify their homes, it can get a
little more difficult. More adjustments need to be made..
Occasionally, comparable sales are impossible to find. Most often, this happens in newly
built-up areas where the sales tract is new. Whether you can find comparable sales does not
affect the market value of the home, but it does impact a buyer's ability to find a lender. Fixed
rate lenders may not lend until there is more history on the area, so the alternative is usually a
portfolio lender. A Realtor has access to title company information and can pull up information
on which lenders are lending in a specific area.
Comparable sales are recent sales of similar properties in the nearby neighborhood or in a
similar neighborhoods with similar prices. In short, they are "comparable" to the house you are
buying or selling.
The comparable sales method is the best way to determine market value for 1 to 4 unit
properties. Other methods are available, but they are mostly used for larger apartment
buildings, commercial structures, and agricultural real estate. They don't apply in determining
market value for traditional real estate.
If you're a seller, your listing agent will help you determine your sales price by showing you
some recent comparable sales. If you're a buyer and preparing an offer, your selling agent will
probably show you some comparable sales so you can come up with your offer price. Whether
you are a buyer or seller, you'll have to make adjustments based on the property and any recent
changes in the market..
Agents provide advice, but buyers and sellers make the final decisions..
Realtors excel when anticipating market changes. They have their fingers on the "pulse" of the
market and know what is going on...now. When determining market value, you need an agent.
An appraiser's main role is to justify a market value or purchase price.
Even so, in most cases buyers need to obtain an appraisal to satisfy the lender that the property
is equitable collateral for their loan. Appraisals of 1 to 4 unit homes almost always use the
comparable sales method to justify a purchase price or market value..
Usually, finding comparable sales is not that difficult. For example, if the home is in a housing
tract where most of the homes were built by the same builder, it is usually pretty easy to obtain
comparable sale information. As time goes by and individuals modify their homes, it can get a
little more difficult. More adjustments need to be made..
Occasionally, comparable sales are impossible to find. Most often, this happens in newly
built-up areas where the sales tract is new. Whether you can find comparable sales does not
affect the market value of the home, but it does impact a buyer's ability to find a lender. Fixed
rate lenders may not lend until there is more history on the area, so the alternative is usually a
portfolio lender. A Realtor has access to title company information and can pull up information
on which lenders are lending in a specific area.
