Finding a good comparable
Agents will often call our office because they are concerned, they cannot find any comparables
to determine the price of their listing. In most cases after a short conversation and some research
we can find comparables, it’s just a matter of knowing what to look for.
Where to look for comparables
The best place to find comparables is in the immediate neighborhood of the subject property.
Due to many similarities the properties will have because of the location this is always the best
option. Having said that if the other properties in the neighborhood are not similar in size,
bedroom count, etc. you would not want to use it as a comparable just because it is close because
there are very few other similarities.
Per Fannie Mae requirements the comparable sales used to determine the value of a home should
have sold within the last 12 months. However, using the most recent similar sales will give you
the best indicator of value.
I will generally start off with a search for properties sold within the subject’s neighborhood in the
last 90 days. If there have been no sales in the past 90 days, I will extend my search to competing
neighborhoods that have similar homes. My first choice is to search in competing neighborhoods
but if that does not produce any comparables I will extend the time of which the sale closed to
more than 90-days in 30-day increments.
Active, contingent & pending vs. closed sales
Active, contingent and pending sales should also be considered when determining the value of a
home but be sure to look closely at them to determine if they are a good comparable. When
reviewing be sure to consider how long they have been on the market and how many price
changes have occurred. If it has been on the market for a long time or the price keeps dropping it
could be because the home is listed over the market value.
A pending sale can give a good idea of the market although not every pending sale is weighted
the same. A new pending sale that is just under contract is not the same as a pending sale that has
been inspected and financed approved and is waiting to close. One that is about to close has
already gone through most of the requirements without any problems therefore it is most likely
to be priced correctly.
There is a lot of information to consider when determining comparables for a property but with
the right knowledge and knowing where and what to look for you can almost always find good
comparables.
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