Setting your price using real estate comps
Last updated on October 3, 2024
Setting the right asking price is a key part of successfully selling a home. One of the most common ways to estimate a property’s value is to conduct an analysis of comparable properties (or “comps”) that have recently sold. This technique is used by individual sellers and specialized real estate teams alike. It can also help you get a solid read on the market. Read on for more details!
Summary :
- What is a comparable property (or comp)?
- What are comps used for?
- The four key elements of a comparable property
- Set a fair price
- FAQ
What is a comparable property (or comp)?
A comp is a property similar to yours that was recently sold in the same area. In real estate, a comparable market analysis helps you estimate your home’s value and set an asking price by looking at recent sales for similar homes in the neighbourhood.
How do appraiser at DuProprio compare properties?
“We start by creating a profile of your home and making an inventory of all its features,” explains Marlène Bates, an appraiser at DuProprio. “This includes things like the location, type of property, year of construction, number of storeys, living area and lot size. Then we check what similar homes in the neighbourhood sold for and make adjustments to reflect the differences between those properties and yours.”
Put simply, you wouldn’t use a two-bedroom condo downtown to gauge the price of ten-room single-family home in the suburbs.
“We also look at equivalent properties that are currently for sale. In other words, your competition,” Marlène adds. “By analyzing how your home stacks up to the others, we can determine the price you should list at to stay competitive in today’s market.”
Good to know: A sale might be agreed to months before it’s notarized, which can create a gap between the purchase price and the actual market conditions at the time of signing.
What are comparables used for?
Comps give you a concrete reference point when you’re getting ready to sell your home. By looking at recent sales of similar properties, you can see where your home sits in today’s market and set a realistic price.
These insights can help you justify your asking price and attract potential buyers while reflecting the true market value.
Features of JLR's comparables generator
Want to see what that looks like in real life? JLR’s Comparables Generator estimates a property’s market value using nearby comparable sales. It has various features, including:
- A database: Access to a large database of real estate transactions so you can quickly find comparable properties.
- Advanced filters: Filter results by location, surface area, property type, number of bedrooms and more.
- Detailed analysis: Compare property features and see how they influence the price.
- Value estimates: Generate accurate estimates based on recent sale comparisons.
- Data visualization: Interactive graphs and maps to help you understand local market trends.
- Custom reports: Create tailored reports to streamline your analysis.
- Real-time updates: Data regularly updated to reflect changes in the market.
Other useful tools
You can look up comps that have been sold nearby on the Registre foncier du Québec website (in French only).
If you’re a DuProprio client, you can also access a directory of properties sold in your area1 via My DuProprio. Plus, DuProprio’s team of appraisers is available to help you set your asking price.
The four key elements of a comparable property
When it’s time to compare properties, you’re generally trying to determine where yours stands in the crowd. And this is normal. Every home has its quirks! To keep a fair, objective view, market value is based on a few key things.
1. Property type
Make sure you’re comparing homes in the same category (single-family home, condo, etc.) to ensure consistency in value and buyer appeal.
2. Location
A property’s value is heavily influenced by where it’s located. Access to services, proximity to schools and the feel of the neighbourhood all come into play.
3. Transaction date
The real estate market can shift a lot over time. Using recent sales helps ensure that your data reflects current trends and not outdated prices.
4. Property features
Things like size, the number of bedrooms and recent renovations influence a home’s value. The comps you look at should share similar features to ensure a fair, representative estimate.
Set a fair price
Doing a comparable analysis helps you get a read on the market. You’ll see the approximate amount buyers are willing to pay for a given property type in a specific neighbourhood.
So, if comparable homes in the area have sold between $480,000 and $520,000, you should probably also list within that range.
“To get an accurate read on your property’s market value, it’s important to target the right market, consider what adds value, and hardest of all, stay objective about your home’s market value,” Marlène explains.
Want assistance? DuProprio’s appraisers are here to coach you through this crucial step—one that can make or break your sale!
DuProprio offers tools and advice from a team of appraisers to help you determine your property’s value and justify your price to buyers during negotiations. To learn more about our learn more about our services, watch our short explainer video or schedule a call with an advisor.
FAQ
How much does an appraisal cost?
The cost of a real estate appraisal generally ranges from $500 to $1,000, depending on several factors such as the size of the property, its features and where it’s located. Free tools are available to do a comparable analysis.
What is a comparable sale?
A comparable sale refers to the recent sale of a property that’s similar to another one in the same geographic area. It’s used to determine a property’s value by comparing it to other ones with a similar size, type, age and features. Comparable sales help buyers and sellers agree on a fair price and understand real estate market trends.
How can you determine a property’s market value?
Start by reviewing recent comparable sales in the same area. Then, look at the property’s characteristics, such as its size and condition. Consider local market trends and, if needed, consult a chartered appraiser. Use valuation methods like the sales comparison approach to arrive at the most accurate estimate possible.
Note: Only chartered appraisers can produce official appraisals particularly for financial institutions. However, you can prepare your own estimate to better understand your property’s potential market value.
