Whether you are buying or selling a home, the importance of recently sold comparable (a.k.a. – “comps”) properties can not be overstated. When working with a real estate agent, a report of comps is typically referred to a Comparative Market Analysis (CMA). Of course, a CMA is critical to a seller to ensure that the property is priced fairly and accurately. Perhaps the biggest pitfall that sellers fall victim to is overpricing their home. Overpricing a home will typically lead to many days on the market, which results in a stale listing. We previously covered this topic here.
On the flip side, a CMA is critical for a home buyer to ensure that they are not overpaying for a property. In hot markets such as what we have seen throughout South Florida over the past few years, it is important to analyze the most recent closed sales to best reflect current home prices. In addition to a CMA, factors such as the time of year, market trends, and property location will also impact home pricing.
Identifying comps
Properly identifying comps for a CMA can be challenging depending on the subject property and the area that it is located in. Ideally, you will want to identify several recently sold homes with similar square footage and features that are located in the same neighborhood. In the event that there have not been many homes sold in the neighborhood, your real estate agent will likely need to search a broader area to determine comparable values.
Alternatively, homes that are located in developments where a limited selection of home models were built can be substantially more straightforward. Typically, the main differentiators for these homes will likely be their lot size and location.
When identifying comps, it is important that you identify homes of similar size with similar characteristics such as the same number of bedrooms and baths, similar age, similar amenities, and similar lot. Once you have been able to identify recently sold comps, you can then begin to compare and contrast various features and amenities to the subject property. Based on the differences in these features and amenities you will then be able to make pricing adjustments in either direction for the subject property. Once these comps and adjustments have been made, they are put into a report known as the Comparative Market Analysis (CMA). To learn more about a CMA, click here.
Summary
Comps are used by more than just buyers, sellers, and real estate agents. In fact, this same process of utilizing comps is employed by real estate appraisers. In addition, real estate attorneys may also rely on comps, particularly when dealing with real estate valuations as part of a divorce proceeding. Regardless of the situation, properly evaluating the value of real estate is critical for any transaction. As always, a local and knowledgeable real estate agent will be critical to your success when buying or selling a property. Throughout South Florida, Live South Florida Realty, Inc. has assisted many buyers and sellers throughout the South Florida market. Do you have questions about the South Florida market? Contact Natasha today!
At Live South Florida Realty, Inc. we have assisted many clients with their real estate needs. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!
