What is a Comparative Market Analysis?
If you’re considering selling your home in the near future, you’ve probably started thinking about how much you could sell it for. You may have used an online home value estimator, such as Zillow Estimates. It's important to note that these online tools don't provide the most accurate estimate of your home's value because they do not take many critical factors into account, such as your home's condition, unique features, and interior upgrades you've made or the repairs and updates that need to be made. The same goes for the homes these sites are using to compare. The comparative homes are based on similarities in location, number of bedrooms and bathrooms, and square footage, without factoring in the condition of the home.
The best way to determine your home's worth is to work with an experienced Realtor who understands the local market and who will run a Comparative Market Analysis report for you. You may have heard this referred to as "running comps." A Comparative Market Analysis is a way to estimate your home's value based on recent sales of similar properties in the same area. Your realtor will assess your property and then find comparable properties that are similar to your home as far as square footage, number of bedrooms and bathrooms, lot size, and special features (such as a swimming pool or garage), have recently sold, and are in close proximity to your home. Your realtor may also include information such as how many days homes are typically on the market in your area and pricing trends. Based on this information, you and your Realtor will determine the listing price for your home. Comps are typically very accurate, but there is no guarantee that your home will sell for the price provided. The market is always changing and the sales price of your home will likely differ from your original asking price. It's also important to understand that a comp and an appraisal are not the same thing. An appraisal can only be performed by a licensed Real Estate Appraiser while comps are done by Realtors. Lenders use the appraisal to ensure that the property is not worth less than the buyer is paying and that the lender is not loaning more money than the value of the home. You may also hear the term Broker Price Opinion, or BPO. To determine the BPO, a real estate agent or broker will use his or her expertise to assign a dollar amount to a property based on certain factors. BPOs are normally performed by a broker who is familiar with the local housing market. In a market like we have now (a seller's market), we often look at current inventory available or the lack thereof to help guide us on the best possible market position and price.
If you're interested in finding out what your home is worth, contact us. Our agents are always ready to help.