How do you decide what to list your property for on the Albuquerque home market? Price it too high and you could scare off buyers, while a price that’s too low means leaving money on the table. To find the sweet spot, you’ll need to look at comps: data from similar homes that have recently sold in the Albuquerque area. In this article we’ll cover:
- Gauge how the market values your home
- Where do comps come from and how are they used?
- Factors involved in determining comps
- Where not to get comps
- Comps aren’t gospel; appraisals are
Comps provide an accurate depiction of what your home might sell for, based on real figures people have recently paid. For example, if a home down the street almost identical to yours sold for $375,000 last month, you can reasonably expect to list and sell yours for around that same amount. You might choose to list slightly lower if you’re in a hurry or slightly higher if the market is hot. Comps are a starting point.
Here’s what every seller needs to know about comps and how they’re driven by the current state of the Albuquerque home market.
Gauge how the market values your home
First thing’s first: a comp is an indicator of how buyers might value your home. This figure might not always align with your home’s appraised value or your current mortgage. It’s an independent number that’s always in flux depending on year-over-year Albuquerque home market conditions. It’s what people are willing to pay right now for your home.
Many different market forces can affect comps, including recent sales, seasons and small variations between your home and the homes you derive your comps from. This is why it’s always best to let a Realtor gather comps—they have access to more data and better examples.
Where do comps come from and how are they used?
Comps come from the recent sales figures of homes similar to yours. Realtors will generally pull comps from like-kind sales in the local area—the closer to your home, the better. They’ll usually pull between two and five comps to create an acceptable price range for valuating your home. Here’s an example.
Jim is ready to sell his three-bedroom, two-bath home in Rio Rancho. He bought the home for $335,000 five years ago. His agent pulls comps from similar local-area homes. A home in the next subdivision over sold for $355,000 last month and there’s one on the market for $349,900 in Jim’s neighborhood. Jim’s Realtor also pulled a comp from last year, for an exact replica of Jim’s home, which sold for $345,000.
This data gives Realtors and sellers everything they need to put together a list price: min, max and mean selling prices of comparable homes. In the example above, Jim and his agent might choose to be aggressive and list his home closer to the $355,000 comp. Or, they might take a more conservative approach and list at $349,500, and hope for a bidding war that pushes the price higher. Either way, their comp give them the data they need to compete in the current Albuquerque home market.
Factors involved in determining comps
Pulling comps takes more effort than simply pulling recent sales data from any home in the area. Comps are only useful if they’re applicable to your home! If you own a two-bedroom, two-bath home in Rio Rancho and pull comp data for a four-bedroom, two-bath in Corrales, your list price won’t align with buyer trends. Comps need to take these factors into account:
- Locations: The closer your comps are to your home, the better. Try to keep them in the same neighborhood, adjacent areas or within a five-mile radius.
- Square footage: Your comps should be roughly the same square footage as your home, within 200-250 square feet. The closer to exact, the better.
- Amenities: Factor in things like a garage, bathrooms, luxury fixtures, home upgrades and any other value-add investments that are similar between your home and comps.
- Recent sales: Pull comps on recent home sales within the last few months. The more recent, the more justifiable your list price becomes.
- Home style: Keep the type of home consistent across comps. If your home is two stories, pull two-story comps, for example. Year built also factors into home style.
- Condition: Make sure your home measures up conditionally to your comps. Likewise, don’t pull comps on rundown houses to set your list price!
The more you can align your comps with your home, the better the data will apply to your list price. The reason? Smart buyers will also pull comps! If your comps are similar to the ones they’re pulling, your expectations will more closely align.
Where not to get comps
There are some things to avoid when pulling comps—especially if the Albuquerque home market has been inconsistent. Here’s where not to pull comps:
- Avoid comps from the offseason (fall, winter)
- Don’t go back more than one year when pulling comps
- Ignore comps from fix-and-flips or short sales
- Don’t pull comps on similar homes located in wealthier areas
- Don’t trust comp data from consumer real estate sites (Zillow, Trulia, Redfin)
Pulling bad comps will set you up for disappointment when it comes time to list your home. As mentioned earlier, you could end up overpricing your listing and scaring off buyers or underpricing and leaving money on the table.
Comps aren’t gospel; appraisals are
There’s one big caveat to comps: they’re not infallible. Comps are what someone might be willing to pay for your home, not necessarily what a lender is willing to loan a borrower. If you use inflated comps to set a list price, then a borrower bids above it, the final appraisal might come in under the closing price. If that happens, you’ll need to go back to the negotiations table. It’s rare, but it does happen!
Finding good comps in an active Albuquerque home market isn’t difficult. Taking the time to make sure your comps are as accurate as possible will position you for success as a seller.
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