Misconceptions About “Comp’s”
Perhaps no other term in real estate seems so straightforward, yet is so commonly misunderstood, as the term, “comparable sold property (“comp” for short).
As Realtors and appraisers use the term, a comp has a very specific — and narrow — definition: namely, a recently sold, similar property that can be used to price the “subject” home (i.e., the one you’re trying to sell).
In practice, to be a comp, a property must have sold within the last six months (preferably, three); be physically nearby (in a densely populated city, usually within a mile); and be relatively similar in style, size, and condition.
Take away any of the foregoing attributes . . . and it’s not a comp.
So, in that spirit, I offer the following:
“It’s not a comp if . . .
–It sold 4 years ago (even if it’s your next-door neighbor)
–It’s more than twice as big as –or less than half the size of — your home
–It’s in dramatically different condition
–The styles are different (rambler vs. 2-story Colonial vs. suburban split-level vs. Tudor, etc.)
–It’s the same size and condition, just sold — but is across town
–It’s a bank-owned foreclosure (at least it’s not a comp until there are lots of them nearby).
Realtors, feel free to send this to your clients anonymously (you’re welcome!).