Looking at comparable sales data, or the comps, is a smart way to figure out whether or not you can afford to buy within a given neighborhood and whether or not a given house is worth the asking price. Real estate sales data is a product of the Multiple Listing Service, or MLS, as it is commonly called. Every board of Realtors has an MLS, but only Realtors, real estate agents, and their affiliates have access to MLS data. Realtors do not normally charge for showing someone the comps; however, just getting the comps isn't enough, you need to assess them.
Most Accurate Method
Call a real estate agent who works in the area. Looking at the names of agents listed on nearby for-sale signs will give you some ideas of whom to call, as well as their phone numbers. Tell the agent that you are interested in buying in a particular neighborhood and would like to look at some of the neighborhood's comparable sales data.
Meet with the agent to collect the printouts and to ask questions. You will want to know why some houses sold for more than others, and the agent will probably have a good idea why, especially if she personally saw the houses. Price variation among houses that appear to be very similar from the outside usually has something to do with condition and updates.
Drive by the houses that the agent gave you as comps. Sometimes a drive-by will tell you why a house's selling price is much different than others nearby. For example, maybe it's the last house on the street before the neighborhood starts edging into a commercial district.
Check sites like Trulia.com and Zillow.com to get an idea of comparable values. They are not as up-to-date or inclusive as comps from the MLS, but you can get a selling price on at least some of a neighborhood's recent sales.
Enter a numbered street address to get as accurate a picture as possible. "Nearby" sales may include houses that are miles away from your target neighborhood, unless you are as specific as possible.
If a selling price you find online looks too good to be true, go to your county or municipality real property office (usually in the county courthouse). There, with the assistance of a clerk, you can check the selling price you found online against the deed. If you see that a bank, a federal agency such as the VA or HUD, or another financial institution such as Fannie Mae now owns the house, you can conclude that the recorded price is not the price a normal buyer would pay; it was the amount that the foreclosing institution paid in court fees.
The selling price determines value, not the asking price, so take care to use "sold" comps, not those that are still for sale.
Be wary of online comparables. They're often not as accurate as MLS data and may be off by as much as 25 percent. One online comp company's data shows that they come within 5 percent of the real value only 11 percent of the time in the Detroit-Warren-Livonia, Michigan, area, ranging to a high of only 38 percent of the time in the Virginia Beach-Norfolk-Newport News, Virginia, area.
- The selling price determines value, not the asking price, so take care to use "sold" comps, not those that are still for sale.
- Be wary of online comparables. They're often not as accurate as MLS data and may be off by as much as 25 percent. One online comp company's data shows that they come within 5 percent of the real value only 11 percent of the time in the Detroit-Warren-Livonia, Michigan, area, ranging to a high of only 38 percent of the time in the Virginia Beach-Norfolk-Newport News, Virginia, area.
Cat Reynolds has written professionally since 1990. She has worked in academe (teaching and administration), real estate and has owned a private tutoring business. She is also a poet and recipient of the Discover/The Nation Award. Her work can be found in literary publications and on various blogs. Reynolds holds a Master of Arts in writing and literature from Purdue University.