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Home Buying, Compare the comparables

By Jackson Phillips Inc

09/11/2009 Almost all home buyers will recognize the term ‘comparables’ after a few sessions with a realtor.

Typically, a real estate agent will suggest a price for a home sale or purchase by referring to the comparable homes on sale in the same area.

Occasionally, there will be nothing for sale that might rank as comparable, making life more difficult or challenging for the realtor and client. Looking on the bright side, the lack of a comparable home on sale now or during the previous year might be a plus for the seller and buyer, at least since they own bragging rights for setting the price for the area.

For most sales of homes, there is a comparable – another home on offer in the area that is similar enough to set the price for the second and subsequent home sales. It is of great help to the buyer or seller if he or she knows how to read comparable information to make sure the agent is suggesting the right price for the home under consideration.
Most sellers, of course, think their homes are worth more than is justified while buyers think they are paying too much for the home and the area. Both should look, as objectively as possible, at the comparables.

Consider, first, the location, the most important consideration in buying any home. If the home is primarily a family residence, as opposed to a single’s pad or retirement place, make certain the home is in the same school district and not just over the line. Is the house on the same street or in the same subdivision? Do both homes have similar views or is one overlooking an office parking lot while the other is surrounded by trees and other homes or is on a preferred ravine? Is one on a corner lot while the other is mid-street?

Ask if the homes are similar in size and, if they are, do they have similar tax rates and costs of operation? Are there major features in one house that are lacking in one or more comparables? For instance, does each have a solarium, swimming pool, garage…?
Look at the construction of each house; a brick dwelling may be worth more in the area than a frame or stucco home. The style of home should be conducive to the neighborhood. One home may have been built by a contractor known for exceptional quality – although this distinction blurs over time as builder reputations are forgotten.
Consider particularly the renovations made to each comparable house. Does another similar home have a new kitchen, bathroom, basement, roof or recreation room in a ‘blown-out’ back of the building that would add value over the home under consideration? Look at the equipment; do both have central air, gas fired furnaces or fireplaces or other appliances that might add to the value of the home or to the cost of installing such things after purchase?

Condominiums can be judged in the same fashion. One might have all manner of upgrades while the other is vanilla plain. One may have a parking space and locker while the other has none. One is on the quiet side of the building while the other is exposed to heavy traffic noise and pollution. In such cases, are these really good comparables? Not unless the price is adjusted to account for the deficiencies of one unit over another.

In many cases, buyers may be fooled by comparables. A buyer may be impressed by furniture and equipment that may make one home look better than another – the comparable – but which will be removed by the seller. The buyer may like the colors of paint in one comparable over the home under offer and argue that the price should come down because of this while the seller may say a paint job justifies a much higher price than for a comparable. These are arguments, often, over a minor cost of repainting a room and not something that should stand in the way of a fair sale.

The buyer of a home - house, condo, cottage or other property - should go through each detail of the home under consideration and its comparables as objectively as possible. Only then will the buyer know whether he or she is paying a price that is too high, too low, or just right for the community the buyer wants to call home.

About This Author

Jackson Phillips Inc

Marketing, advertising and technology company focusing on the home and real estate markets. Video platform, content, directories and more. Ad network, content and video syndication, online TV webisode production company. Contact us today to learn more…

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