Selecting Similar Comparables

To determine a realistic price range, the licensee selects properties that are similar to the subject property in size, location, and features. Recently Sold properties are the most important category because they represent historical facts—what actual buyers were willing to pay in the recent past (typically the last 3 to 6 months). Currently on the Market (Active) listings represent the competition; they show what the seller is up against and often set the upper limit of the price range. Recently Expired listings illustrate what not to do; these are homes that failed to sell, usually because they were overpriced, helping the seller understand the "danger zone" of pricing.When choosing comparables, the licensee looks for the "common elements" that drive value. The most critical elements are usually location (same subdivision or neighborhood), size (square footage of living area), number of bedrooms and bathrooms, age of the home, and overall condition. The goal is to find "apples-to-apples" matches so that minimal adjustments are needed. If a house in the same neighborhood is 1,000 square feet larger, it is generally not a good comparable.