Comparable sales are used to estimate pricing on real estate for many reasons. The value of properties recently sold and those properties of similar structure and size are used to estimate the value of the current piece of real estate. This gives the property owner and the buyer of it an idea of its real worth. These comparable sales basics can be enhanced in many ways.

By using comparable real estate sales, real estate agents and other professionals can produce a very good picture of the value of the property. This is part of the formula used by appraisers to determine the value of real estate as well. When using this information, keep the following in mind:

1. Determine comparable home sales within the right region, since the area of comparison should be close.

2. Invest in comparable sales data that is as up to date as possible.

3. Learn about comparable properties through a variety of sources.

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Use comparable property sales information from public records

Public records are a free real estate comparables tool that can be accessed by the general public. Use the deeds filed with municipalities or the local county recorder's office. The only downside to using this information is that it can be six-to-eight-weeks behind the current market, making it less accurate for rapidly changing markets.

I recommend: Locate comparable house sales ny searching local public records. Nationwide Environmental Title Research provides a comprehensive search tool for locating public records. It is a tool used in correlation with the many county and municipal recorders' offices. PublicRecordFinder is another source that provides public record searches for property sales and information.

Find comp sales from the Multiple Listing Service

Real estate comparable sales are available through the Multiple Listing Service, or MLS. Generally, this is a real estate agent's resource for locating properties for sale, but it can also be used by the public through a variety of websites. The key is to find the selling price posted on the MLS just after the property sale is complete. This information remains posted for several months or longer.

I recommend: Seek property comparables through researching the MLS. The National Association of Realtors offers an excellent tool for locating properties on the MLS, including a newer home values search function for the country. Other services, such as Zillow, provide information about the value of properties based on the MLS tools. They do the research and compute pricing automatically.

Utilize pending sales for comparative sales analysis

The most accurate and most current information available for comparable home sale prices comes from pending home sales. These are properties that are just selling. This information is rarely available to the public, so hiring a real estate agent is necessary to use this information to price real estate.

I recommend: Choose comparable sales in this form for the most accurate information. Hire a real estate agent to handle this information gathering. Finding a local, experienced realtor is often the best investment. For those purchasing property, there is usually no cost to hiring an agent as the seller of the property pays the commission. Use nationall companies such as Century 21 Real Estate. Another service, ePoweredProfessionals, provides a list of available agents by state.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  When using comparable sales in the public record, keep in mind that any changes to the property have likely not been updated. New additions, structural changes and even remodeling is not always recorded.

Each property sale is unique so it might be difficult to find comparable sales data for your client's home or business property. To get the right mix of comparable sales you may need to search outside of the regular sales lists.

You want to get the most accurate comparable property sales for your client. Whether it is comparable home sales, business property or rental, you always need to keep several things in mind in order to make the best comparative sales analysis:

1. Area where the comparable properties are located
2. Condition of the property
3. Size and style of the construction of the structures contained on the property
   

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Find similar properties for your comparative sales analysis

It's not always easy to find comp sales, especially on unique properties such as rentals and business establishments. You need to search out easy to navigate comparable search tools to have the best most accurate comparables at your fingertips.

I recommend: Find comparable sales in the public record of commercial property transactions by visiting the LoopNet website. You'll need to register to use the site, but they provide free real estate comparables for over 900 thousand commercial properties. If you are looking for comparable house sales transactions made by private owners, visit eppraisal.com.

Know the comparable sales location

When doing a comparative sales analysis, you need to know the benefits of the region and the relative home sales climate of that particular locale. Even though property values may soar in one borough or township, just minutes away you may find neighborhoods that are in decline.

I recommend: Visit the Intelius website for up to date neighborhood statistical analysis, sex offender reports, and tax data. You'll have to pay for the report, but you'll get a substantial discount if you join Club Intelius. They also offer volume discounts. City-Data.com brings this information, plus important business and vital statistical information, to you for free without a registration. It is only slightly less user friendly with a bit more clicking involved.

Get a property inspection to establish comparable home sales prices and business sales prices

Inspecting a property or home is the only way to identify things like termite damage and foundation problems, both of which do severe damage to the value of the property. Consider properties with those same specifications to get an apples to apples comparison by getting a home inspection done. This way you'll know as much about the property as possible and so will your potential buyers.

I recommend: Visit the American Society of Home Inspectors search page to find a certified home inspector in your area. Also consider using a home inspection service such as National Property Inspections if you'd rather have service take care of some of the minor details. Just be sure ask if the inspector they refer to you is ASHI certified.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Take a drive to that locale and visit the property and its neighborhood. A quick drive through the town sometimes tells you more about comparable properties than statistics can.

Comparable sales are one of the best tools to use throughout the buying and selling process. This gives the property buyer or seller an inside look at the value of the property. It will still be necessary to obtain an official appraisal at the sale of the property, but having this information beforehand ensures pricing is accurate from the start.

Utilizing comparable real estate sales properly is important. The size, structure, features and location of each piece of real estate must be taken into consideration. Even then, the actual values can be highly opinionated. Making the most of comparable sales often means getting help. Keep the following in mind when doing so:

1. Choose the best sources for comparable sales data including the most up-to-date and thorough information available.

2. Seek out trusted, proved professionals to aid in the search for comparable home sales information.

3. Interpret the comparable property sales information without any influence from what the goal property value is.

Action Steps
The best contacts and resources to help you get it done

Use a real estate agent for comparable properties resources

The most accurate information in comparable house sales is through a real estate agent. These professionals have resources to help them gather, compare and analyze property sales happening in real time, including pending sales. Use their services for the most accurate comparison.

I recommend: Gather real estate comparable sales through experienced and local real estate agents. To learn more about the benefits of hiring a realtor, use RealtyTimes. The company provides an extensive list of what these professionals provide. The National Association of Realtors provides an easy tool for locating realtors. These real estate agents adhere to very specific association standards and are the best in the business.

Perform a comparative sales analysis to determine list price

Property comparables are used to determine the best list price for a property entering the market. Use this information from trusted resources to gauge the real estate market trends and to determine the most fitting pricing point for the property to list at.

I recommend: Determine comparable home sales prices through trustworthy third-party websites, such as Domania. Here, step-by-step instructions on how to use comparable sales are given so the average homeowner or other property owner can determine the best pricing point for their property. Use the tools available at Yahoo! Real Estate to help determine the sale prices of houses just sold.

Find comp sales to determine if refinancing is possible

Another way to use comparable sales is to use the information gathered to determine the value of a property currently owned. This can help the real estate owner to know if the property is worth enough to refinance the mortgage loan. With property values falling, or rising, it is essential to know the property's worth prior to investing in an appraisal service.

I recommend: Locate free real estate comparables to determine if the mortgage can be refinanced. Zillow is the most accurate tool available, providing an estimate of value in comparison to other properties in the area. The company uses available Multiple Listing Service (MLS) information and public records to determine property values. Ditech offers a free eAppraisal service, which gathers available information and computes an estimated property value.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Many tools use comparable sales in the public record to estimate the value of a piece of property. Local public records are a good source, but keep in mind that these deed filings may be six-to-eight weeks behind the current market. Therefore, it is often best to use them as a secondary tool and count on professionals for more accurate and current information.

Comparable sales are used as a means to appraising properties and obtaining the best possible market value for any given property. Values can change rapidly based on recent sales in the area and appreciation or depreciation of the property in question.

Once you've mastered a few of the key terms associated with comparable sales, you'll be able to understand how they affect the overall appraisal process. Both buyers and sellers can use comparable sales as a means of reviewing value and market stability.

Action Steps
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Property details report or sales comps

A property details report, sometimes called sales comps, is an informational report about the properties with similar characteristics in the area. Reports allow you to compare many different options from sales price to number of bedrooms.

I recommend: Data Quick defines the property details report in their help section.

Comparable market analysis

The comparable market analysis, CMA, is a report that lists properties that are similar with information about the sales market. The report allows you to compare the current selling prices and historical sales numbers with the property you are interested in. A CMA will also help you determine whether prices are falling, rising or remain the same.

I recommend: The definition of comparable market analysis is available at Domania.

Alternative user value

An alternative user value is an estimate of value the property may have for a future use other than what it is currently being used as or sold as. One example would be an office space that you could convert into a salon.

I recommend: Review the definition of alternative user value at the Mahadeo Nirman Pvt. glossary of terms.

Appraisal

Comparable sales are a very important part of the appraisal process. You should always hire a professional appraiser to conduct the appraisal, or review of what the property is officially worth on the market. The report can be very subjective because it is solely one person's opinion, which is why a licensed professional with experience in the area should do an appraisal.

I recommend: RealestateABC.com defines the appraisal process and explains how comparable sales are used in determining market value.

Geographic, size and finish comparables

Comparable sales can be categorized as geographic, size or finish comparables. Each is adjusted based on the specific options present. In a geographic comparable, the appraisal is based on sales in the general area of the property. The size comparables report is based on similarly sized properties in the geographic area, and the finish comparable adjusts by comparing interior options like cabinetry, flooring, countertops and other finishings to compare properties.

I recommend: The LinkRoll.com offers an explanation of each type of comparable in its real estate pricing guide.

Appreciation and depreciation

Appreciation is the amount of value a property gains over a time period, while depreciation is the opposite. A depreciation figure shows the loss in value over time.

I recommend: ReMax explains how the real estate market can affect the value of a home and defines both appreciation and depreciation.