Whether you’re in the market for a house or planning to sell yours, you may wonder, “Is this house overpriced?” House comps help to answer that question. Buyers, sellers, and their agents typically use comps to evaluate if a house is properly priced based on the home’s size, condition, and location, as well as other factors such as lot size and accessory dwelling units (ADUs).
Based on REMAX’s experience on the ground, this guide will show you how to find house comps and how to evaluate a home price. This knowledge will help you make offers with confidence if you’re buying, and set your sale price strategically if you’re selling.
Key Takeaways
- House comps are one of the most reliable ways to determine whether a home is fairly priced.
- The most useful comps are recently sold homes with a similar size, location, and features.
- Price per square foot is a key metric when comparing listings to comps.
- Signs of an overpriced home include a long time on the market, repeated price reductions, and low appraisals.
- Working with a real estate agent can help turn comp data into better pricing and negotiating strategies.
What Are House Comps?
House comparables (“comps”) are recently sold homes that are similar enough to the property you’re evaluating that their sale prices can be used as a benchmark. For example, if three similar homes in the same neighborhood sold for $400,000 to $425,000 in the past few months, a home listed at $500,000 could be priced above its fair market value.
How Do I Find Comps for My House?
There are several ways to find comps for a house you’re selling or thinking about putting an offer on:
Use Online Real Estate Platforms
Online platforms allow you to see recent sales in a given area and filter by home characteristics. While these tools don’t give you all the data available to a real estate agent, they’re a good starting point that will give you a general sense of the market. Look for the “recently sold” filter and focus on sales from the past three to six months.
Check Public Property Records
Sale prices are a matter of public record in most US states. Your county assessor or recorder’s office website may allow you to search recent sales by address or neighborhood, which will supplement what you find on public listing platforms.
Ask For a Comparative Market Analysis (CMA)
A CMA is a formal report that your real estate agent can prepare that compiles and analyzes comps. With a CMA, you’ll have a more fine-grained analysis than if you assemble the data on your own. Most agents will do this work at no charge.
What Makes a Good Comp?
Not every nearby property qualifies as a useful comp. When evaluating house comps, focus on sales that share as many of the following characteristics as possible with the home you’re considering:
- Location: The comps should be within the same neighborhood or subdivision, within a mile or two in urban and suburban markets.
- School district: School quality makes an enormous difference in home pricing.
- Size: Similar square footage, generally within 10% to 15%.
- Bedroom and bathroom count: A four-bedroom home should be compared to other four-bedroom homes. If no direct comparables are available, adjust for the difference.
- Age and condition: A newly constructed or fully renovated home and an original-condition home of the same size are not equivalent comps.
- Lot size: This is particularly important in suburban and rural markets where land contributes significantly to value.
- Recency: Ideally, the comps will have sold within the past three months. In slower markets, you may need to extend your window to six months, but in fast markets, look for comps that have sold more recently.
A good comp checks all these boxes, but that’s not always possible. Ask your real estate agent to make adjustments based on variations.
How to Use Comps to Evaluate a Listing Price
Once you have a set of solid comps, compare them to the listing in question. Start by calculating the price per square foot for each comp price and compare that figure to the listing you’re evaluating. If the listing’s price per square foot is significantly higher than the comps, take a closer look at the property to see whether the difference is justified. Some legitimate reasons a home might be priced above its comps include:
- Recent high-quality renovations: A fully updated kitchen, bathrooms, or primary suite can add significant value.
- Better lot or location: A larger lot, a better street, or a premium view can justify a higher price.
- Unique features: A professionally landscaped exterior with outdoor living space, a finished basement, or an accessory dwelling unit (ADU) may command a higher price.
If none of these factors apply, you’re likely looking at an overpriced listing.
Other Signs a House Might Be Overpriced
Comps are the best way to evaluate a listing, but a few other things are worth paying attention to:
- It’s been on the market longer than average. Check the days-on-market figure for the listing and compare it to the local average. A home that’s sitting while similar homes sell quickly could mean the property is priced too high.
- It has had price reductions. Multiple price cuts suggest the sellers started too high and haven’t received offers at higher levels. If it’s still not getting interest, it may still be overpriced.
- The appraisal comes in low. If you make an offer and the home doesn’t appraise for the purchase price, that’s confirmation that the home is priced above market. At that point, you’ll need to renegotiate, make up the difference in cash, or walk away from the deal. To facilitate this, make sure your offer is contingent on the appraisal.
What to Do If You Think a Home Is Overpriced
If you’re the seller and your home is listed too high, you’ll see nearby comps selling while your home isn’t getting offers. If thirty days go by without an offer, it may be time to drop the price. To signal that you’re serious about selling, consider a drop of 3% to 5%
If you’re buying and you’re genuinely interested in the property, your agent can use the comps to make the case for a lower offer. Sellers who have been on the market for a while are often more receptive to offers that are backed by a serious CMA.
How to Tell If a House Is Overpriced Using Comps
It’s helpful to know how to use house comps to evaluate house prices, but having an experienced real estate agent to assist you is where this data turns into negotiating power and more strategic pricing. Be sure to choose an agent with plenty of local knowledge for the best analysis and guidance.
Frequently Asked Questions
What are house comps in real estate?
House comps (comparables) are recently sold homes that are similar to the property you’re evaluating. They’re used to estimate a home’s fair market value based on factors like size, location, condition, and features.
How recent should comps be when evaluating a home price?
Ideally, comps should be from the past three months, especially in fast-moving markets. In slower markets, you may need to look back up to six months, but more recent sales generally provide a more accurate picture of current value.
How close do comps need to be to the property?
The best comps are located within the same neighborhood or subdivision, typically within a mile or two. Staying within the same school district and local market conditions is also important for accuracy.
What makes a home overpriced compared to comps?
A home may be overpriced if its price per square foot is significantly higher than that of similar recently sold homes, without clear justification. Factors like renovations, lot size, or unique features can explain higher pricing, but without them, the listing may be above market value.
Can I find comps on my own, or do I need an agent?
You can start your research using platforms, as well as public property records. However, a real estate agent can provide a more detailed Comparative Market Analysis (CMA) and help adjust for differences
