Realtors throw the word “Comp” around a lot. Many of us don’t realize that people not in the industry may not know what the word means.
“Comp” is industry speak for “Comparative Market Analysis”. It’s also sometimes known as a “CMA”.
Does that help? Probably not much. So here’s an explanation in English.
When you sell your home, you need to have an idea of what the market says it’s worth. This is not what you want to get from the sale, but it should give an accurate estimation of what a ready, willing and able buyer will pay. Because that is the only true gauge of what a property is worth.
So how do you figure out what this value is? That’s where your Realtor comes in. You should hire an experienced Realtor who is familiar with your type of home and your area. Your nephew who lives and works in North Jersey probably isn’t the right person for the job. Nor is your neighbor who works part-time as a Realtor.
An experienced agent will compare your property with similar properties in the area that are currently available, under contract and that have closed in the past 6 months. Sometimes homes are cookie cutter homes, with many of the same style home in the area. Others are harder to find comparable sales. Sometimes we need to compare homes that have similar tax assessed values. Once your Realtor has gathered that info, it’s time to look at the general condition of the property and make adjustments.
Please don’t go to any websites that offer a computer generated Market Analysis. Generally they just choose all sales within a certain radius, add the sale prices and divide by the number of sales. But what if your 3,500 square foot home with new kitchen and baths falls in the same radius as the 1,400 sq ft two bedroom condo? This is why you need an experienced Realtor to perform your Comparable Market Analysis.