Doing your homework: Looking at Comps
If you're looking to purchase a home, you need to do your research. Looking at comparables is an excellent way to gauge a property's true value. A comparable property is one that is similar in size, condition, neighbourhood and amenities. Reasonable sellers know that their price must reflect the market comps to be competitive. When looking at comparables, you should be looking at three types:
- Recently sold comps – How does the property you’re looking at compare in price with ones that recently sold? Is it more or less expensive? Your real estate agent should be able to provide you with accurate information.
- Comps that are currently on the market – If there are a few homes for sale in the area that you are looking in, check out the other properties and see how they actually compare to the one you are considering. Go to their open houses and see if they are truly comparable in terms of size, condition, etc.
- Recently on the market but didn’t sell – It may indicate that the house you are considering is overpriced if a similar property was taken off the market because it didn’t sell. And if there are a whole bunch of similar properties in a neighbourhood that are for sale at the same time, the overall prices should be lower. Your real estate agent should be able to provide you with this information.