Comps is short for Comparative Sales. Property value is determined by what other properties like it(Comparative Sales) have recently sold for.
There are several ways that properties are priced, depending on the seller's goals. It is helpful, in this market of multiple offers, to know what the property you like is worth before making an offer. To do that, the agent goes on the MLS and "runs the comps". That way, you can determine what a "good offer" really is.
It doesn't have to be just sold properties. It could be active listings as well. The active listings are your competition. If you know what is going on with the competion, then it can help to price your house accordingly.
For example if a similar house is listed at a certain price, but has been on the market for a long time, then most likely you need to be priced below that point since the comparable hasn't sold. Pricing it at the same point or higher wouldn't make sense.
You use a combination of sold, active and even cancled/expired listings to help determine a list price or a price to offer when purchasing.
Comps are "Comparable" properties. They should be from the same location, the same size and condition, same style and same ammenities. If you can't find anything within that spectrum, then you go to the next best thing and add or subtract what it has or does not have.
I see you have home buyer under your name. From the previous answers you must know what "Comps" means now. As a buyer however; running comps and making an offer based on that could cost you the home you want to buy. Many of our homes, in fact most of the homes in Corona are selling with multiple offers on them puching the price up with each sale. Many over the asking price. We have a different type of market right now. Many homes that were foreclosed on in the area caused certain areas to have some very low comps. That does not necessarily mean the homes in general will all sell at that price. If you offer based on what the home across the street sold for, you may be disappointed. Many times the foreclosure homes were VERY abused and that is why the low price. Look for a Realtor who is familiar with the area to help you with your home search. That is the best thing you can do for yourself in looking for a home.
Best of Luck to You,
The active comparable listings tell you that no buyers have been willing to pay the asking prices for these homes.
The pending and accepting back up offers listings - don't mean a whole lot either. The reason is that we don't know if the offer that was accepted for more or less than the list price.
Now the homes sold within the past three months really tell the story. The fact that they sold tells us that people were willing to pay the price these homes sold for, in this market, in their location, and in the condition they were in.
The recent sold "comps" (comparables) are what appraisers look at. It's also what new sellers and buyers should look at. It doesnâ€™t matter that the guy down the street is asking $20K more for the same model. He can ask whatever he wants but it has no bearing on the value or what people will be willing to pay. If the very local housing market is going up or down very sharply that is diffinently something to consider at the time also.
Please remember that even if you purchase for over appraised value (which many buyers are doing nowadays), the sales price you paid for your home is now a comparable for homes in the neighborhood, which helps bring up the values in the neighborhood.
Comps= comparable property price= someone with acess to a Muptiple Listing service looks up what properties are selling for, then compares the price useing comparable number of bedrooms, bathrooms, square footage of living space, lot size, year home was built, lot size, etc., then trys to determine a value of what a property in that area is worth.
comparable sales are sales within a short time and preferably close to the property in question.
this is almost as much magic as science. You take a 2 story with a pool that sold. take off this much for these features missing. Add this much for these features it did not have and so on. Then it comes close to the ranch you are looking at.
comparable sales are never completely comparable but with some accommodations made for changes it can come fairly close to showing what another house nearby should sell for.