“I don’t see how you can use comps to determine value. My house is remodeled and the house across the street just sold and it was in terrible condition. You can’t tell me my home is worth what his is.”
You’re right. I can’t and I won’t.
Even though a “comp” is supposed to mean a “comparable” sold property, few homes are so identical that you can compare them “straight across” without making adjustments for:
- Timing (Price changes since the comp went into escrow)
- Lot size
- Condition & appeal
And that’s where the art or skill of determining a home’s value comes in: knowing how much to adjust for all these factors.
The truth is, it’s not easy.
And that’s why so many people use shortcuts that flat out don’t work. Shortcuts like Zillow (a joke) and “price per square foot.” I’ve addressed these many times in previous posts, so I won’t get into it.
The bottom line is you’re right and wrong:
You can’t use comps…unless you make the right adjustments.