For a long time Realtors® have used comps, lists of comparable home sales, to make their case for the price of a home. Whether it’s a listing agent trying to get a new listing, or a buyers agent looking to justify an offer price, they usually have a list of comparable sales to support their numbers.
And for listing agents, I suspect that that’s still the way it’s done.
Because most sellers just rely on the comps provided by listing agents to help them arrive at a list price for their home. Period.
But with buyers there’s a lot more active participation and therefore less reliance on these somewhat abstract comps. Abstract?
Well yes, because generally, sellers have seen very few, if any, of the homes on that comp list. So they’re just numbers on a page and therefore easily misconstrued.
Buyers, on the other hand, are out there pounding the pavement day after day, looking at homes and comparing one to another, keeping lists and checking them twice, as they keep an eye on what sells, what doesn’t and at what price.
And by the time they’re ready to make an offer, buyers usually have a nice, well-rounded market education – at least for the type of home and price range that interests them. And at that point they don’t need comps to tell them what a house is worth. They already know what it’s worth to them. And that’s all they really care about.
Because in this market and this economy, both of which are still zigging and zagging, educated buyers have less regard for what other buyers paid for their homes three, four and more months ago. And are much more interested in, and concerned about what that house may be worth two, three and four years in the future.
So while ‘the comps’ can still be a useful reference, to many buyers they are not the be-all and end-all they were in the past.
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