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What is a Comp?

You may have heard comp or comparable used in real estate parley. The definition of comparable or comp can be elusive especially to those who don’t dabble in the real estate industry day to day.

In this down market you might hear folks gripe that their agent used a foreclosed home as a comparable.  The question is; is this the right thing to do?  In a word…YES.  It is.

Comps/comparable properties share a similar age, style, size, design, property type and location.  So a 2 bedroom, 2.5 bath foreclosed townhouse in the  Five Oaks neighborhood is indeed a comparable to other 2 bedroom, 2.5 bath  townhomes of similar age and size.  An agent who doesn’t consider foreclosed or short sell homes when generating a market analysis is committing a grave disservice to his client because in the end a buyer’s mortgage lender will step in with a definitive bank appraisal which will consider foreclosed and short sell homes in establishing value and no one wants to get cut like that so close to settlement.  It’s best to get price right out of the gate.

 

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