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Why "Comps" are So Important - How to Research Comparable Sales in Your Area When Setting Your Home

Posted by  on Feb 08, 2010
 
If you have shopped for a home in the past, you know that you cannot simply look for a home by looking for 'For Sale' signs. Not only is this a waste of time, but it also does not give you a good idea what a specific property costs — and if that cost is reasonable or not. Known as 'comps,' you need to start researching comparable sales prices in your target area before you start setting the price for your home.

Determining the Value of Your Home

Begin the price setting process for your home by having an inspector or appraiser establish a value. They will look over the structural integrity of your home as well as the surrounding neighborhood values to determine what is reasonable. This can give you an objective opinion on your home to start off with and then to build from in terms of additions you have made to your home as well as the current housing market values for your area.

Make a list of all of the additions and the repairs over the past five to ten years in order to see how the value of your home has increased. While you will not see a dollar for dollar increase in the price, you should certainly see some increase in the value for each of the additions you paid for.

Looking at Real Estate Listings

Start by researching home listings in your local area. Look for homes with the same square footage and number of rooms first. Then, start to compare the features your home has in relation to other homes. You should begin to see a pattern in terms of the prices that are being listed. You might also want to call up a realtor to see what they might say a home like yours would be worth. Call a realtor with the specifications of your home and then ask what a reasonable price range would be. This can give you an idea of what a realtor expects to sell a home for.

Why You Need to Start Comparing

While it is true you want to sell your home for a lot more than it was originally bought for, this is not always possible. In today's buyer's market, many sellers are finding that they need to go low in order to get any bites on their real estate advertisement. However, when you look at the other home values of your area, you will be able to get a fair price that is going to sell your home without undercutting your profit on the home sale itself.

Also, look at what makes your home different from others in your area so you can increase the selling price as necessary. For example, if you notice that your home has four bedrooms, but it also has a den, you might be able to sell it for more than a home with just four bedrooms or three bedrooms and a den. Finding out what other homes are selling in their advertisement and for what prices is a great way to be sure you understand what buyers are reading in ads and what they will expect to see in yours — sometimes it's all about what you list.

Learning to compare the prices of homes in your area is not difficult, but in order to sell your home at a reasonable price, you will need to do a bit of work.

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