The term "comparables", or "comps", plays a significant role in real estate transactions. Comps are essentially a method of estimating the value of a property by comparing it to similar properties that have recently been sold. Despite the seemingly straightforward concept, the interpretation of these comparisons can differ substantially based on who is conducting the analysis. Herein lies the discrepancy between how real estate agents and property appraisers view and handle comps. This comprehensive guide from CrossCountry Mortgage elucidates the diverse perspectives on comps and how they may influence your home purchasing experience.
Deciphering the Complex World of Property Comparables
Navigating through the complexities of home buying necessitates a sound understanding of various concepts and terminologies, one of which is "comparables". The idea of comps, which heavily influences property tax, home pricing, and even mortgage decisions, is fundamental to a financial understanding of the property market. Engaging in personal research about comps ensures home buyers do not exceed their budget. Both your real estate agent and mortgage advisor from CrossCountry Mortgage are invaluable resources during this exploration.
Initiating comps research entails identifying similar properties using specific criteria such as property type and size, location, sale conditions, and the time of sale. Upon identifying a suitable property, ascertain its selling price to guide your potential offer. While the property sales data is publicly accessible in many US states through the county recorder's office, some states have strict non-disclosure laws on property sale prices. For such scenarios, your real estate agent or a CrossCountry Mortgage advisor can assist in estimating comps.
Analyzing Comps: Real Estate Agents vs. Appraisers
The source of comps is not universally standard and can be subjective, using data from various avenues. This is particularly evident in non-disclosure states. Thus, the interpretation of comps by an appraiser may deviate significantly from a real estate agent's perspective.
Real estate agents, while experts in their field and known for their integrity, have a primary responsibility towards their clients to obtain the best possible selling price. Hence, their analysis of comps may lean towards the generous side, aiming for higher offers. In contrast, appraisers owe their responsibility to lenders, not sellers or buyers. Regulated by rules and laws such as the Truth in Lending Act and the Uniform Standards of Professional Appraisal Practice, they are bound to offer an unbiased appraisal of a property's value. Therefore, an appraiser's interpretation of comps can differ from a real estate agent's.
Guidelines for Buyers: Navigating Real Estate and Appraisal Comps
Though professional ethics govern your home buying journey, a personal understanding of the process provides an added advantage. A bit of independent research about recent comps in your desired area can be very revealing.
Ensure you leverage your real estate agent's expertise. They are bound by their professional commitment to safeguard your interests. Before making an offer, discuss with your agent about any potential appraisal gaps in recently sold comparable properties and any other relevant concerns.
Engage with your lender. CrossCountry Mortgage, with local branches all over the USA, is a great resource for understanding local market trends. They can provide additional insights supplementing your real estate agent's advice, helping you anticipate what lies ahead.
Finally, conduct your own research. Public records of property sales are easily accessible in many localities, providing a valuable resource for comps. This can assist in determining if the asking price is fair or if you may need to bid above the asking price. Concentrate on the right type of property, with emphasis on properties sold within the last 3-6 months for the most relevant information.
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