Real estate comparables

<<>> Real estate comparables

What are real estate comparables?These are homes that are used to compare to the subject (the home that is being appraised). The comparable sales are selected by the appraiser. They select the best real estate comparables for each situation.

Let me explain. If your home offers 1200 square feet on the main level and a basement with 500 square feet, the appraiser will look for homes with similar above grade (above ground level) square footage and similar basement areas. Lets say you have a home that is located on the primary water frontage. In this case homes located on similar or competing water frontage would be the best comparable sales to select. So you see, in each situation will be different depending on the available sales and the criteria that offers the best support for the value of the home.

Why do appraisers and realtors use real estate comparables?Appraisers and Realtors use comparable sales to determine the value of a home or to determine a listing price for a home that the realtor will try to sell. This is the best method to use to determine a listing price or the value of a home. Real estate comparable sales is what determines the value of your home. Real estate appraisers use the cost approach to value and the income approach to value, but in 99% of the cases for residential appraisals that are not rentals, the main way to determine the value is to use real estate comparables.

Where do you find real estate comparables?Comparables are simply homes that have sold or that are listed in the multiple listing database. This is the database of homes that is put together by the realtor association. The MLS sheet gives details of the exterior of the home, a photo of the home and interior photos of the home. It will tell the realtor or the appraiser what kind of financing it is such as cash, conventional, FHA, VA, etc. Sometimes a photo is worth a 1,000 words. A photo will give you the design and appeal of the home and, most of the time, it will tell you what kind of siding the home has, bedrooms and what level they are on, if the basement is finished, etc. this will be cross checked with public records and the realtor to be sure that this data is correct.

How many real estate comparables does an appraiser use to determine your home value?The appraiser will select a minimum of three closes and sales and sometimes they will use one to two listings to further confirm the value of the subject. The close sales will be given more emphases, but sometimes the listings will provide the direction of the market and offer further support for the final value. Listing price vs sales price is always taken into consideration. Free comparable sales