In a Swiftly Changing Market, Comps Need Scrutiny

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When it comes to what an individual homeowner can expect when they add their own property to the listings, the most reliable predictive clues come from the comps: how the local has treated comparable offerings. But those results should always be subject to scrutiny—realistic refinements that account for the degree to which the chosen properties are truly comparable. Factors to be examined include:

Correspondence. Of course, no two properties are ever exact duplicates. Even in housing developments where models follow identical floor plans, décor and landscaping details create differing ambiances that will appeal to some buyers (and put off others). For most existing homes, square footages and numbers of bedrooms may match, but even the curb appeal of any two properties will seldom be truly comparable.
Location. The neighborhood factor, the condition of neighboring properties, school district ratings, proximity to desirable or undesirable public facilities all affect the sale price any listing will have garnered. Even micro-location factors like elevation and view can make one property significantly more appealing than another “comparable” one.
Recency. In a swiftly changing like today’s, the relevance of any comp’s sale figure can rapidly fade.

The “comps” are what banks and other lenders largely rely on for their estimate of the collateral value of any property. But when it comes to developing the all-important asking price that appears on their own listings, sellers have more leeway in evaluating the degree to which relevant differentiating factors may alter buyers’ responses (especially when values are rapidly advancing).