Determining Property Values with Comparable Sales for Real Estate Investors

Bonus Module

Determining a property's value can be an important step when buying your first investment property depending on your strategy and why you’re buying the property.

By reviewing comparable sales, or "comps," you can get a clearer picture of what similar properties have sold for, helping you make more informed decisions.

Here’s how to do that.

Table of Contents

Here’s what included below:

• Why Comparable Sales to Determine Value

• Property Info Comparable Sales Data

• Most Important Factors for Comps

• Finding Comparable Sales

• Square Footage

• Proximity

• Property Type or Style

• Age of Property

• Select Your Best Comparables

• Your Current Competition: Actives

• Asking Price Versus Sold Price

• Why Get Access to MLS

• Warning: Lack of Comparable Sales

• Value of Upgrades

• Market Based Adjustments

• Stable versus Changing Markets

• Income Properties vs Owner Occupant

• Determining Value and Comparable Sales

• How Accurate Are Automated Valuations?

• Buyer’s Eyes

Why Comparable Sales to Determine Value

When you’re buying your first investment property, it’s important to understand the value of the property before making an offer. One of the best ways to do this is by reviewing comparable sales, or “comps.” Comps show you what similar properties in the area have recently sold for, giving you a sense of whether the property you’re looking at is priced fairly.

• What Is a Property Worth? - You need to know if you're paying a fair price. If you’re buying, are you paying too much? If you’re selling, are you getting enough?

• How Do You Know? - Look at recent sales of similar properties to see if the price is right. This helps you avoid overpaying or offering too little.

• Compare Apples to Apples - Don’t compare a small, old house to a large, new one. For a good comparison, the properties need to be similar in size, condition, and location.

• Identical Properties Should Sell for Similar Prices - If two properties are the same in every way, you’d expect them to sell for about the same price. But if a property has different features or is in a different area, the price could vary.

• What Makes Properties Comparable? - To determine if a property is comparable, look at things like the number of bedrooms and bathrooms, square footage, year built, and location.

Property Info Comparable Sales Data

Not all properties are the same, so it’s important to focus on specific factors that will help you find the right comps. By looking at data from properties that are similar in key areas, you can get a clearer picture of the property's market value.

Here are the factors to consider when comparing properties: