When buying a property, most agents only give you 1 thing – “Comps” which is short for “Comparables”. This a list of similar styled properties that sold/closed within the past year or so on the “MLS” or Multiple Listing Service and that’s it! The MLS is the database that all real estate agents use to buy and sell properties on the market. Here is how 95% of the real estate agents, brokers and investors "Run Comps" the wrong way:
They will pull all Closed Properties near your Property without looking at closing dates so they are “stale”.
Many of these Closed Properties will be more than 1-2 miles away and may even be in a different town/city.
Some of these Closed Properties closed more than 90 days ago.
Some of these Closed Properties are either the wrong house style or if the correct style, are 50 years older or newer than your property.
They will NOT make any adjustments to the Closed Price for differences between the Closed/Comp house versus your house. So, for Example, if the Closed House had 1 additional full bathroom than your house, they would just leave it when they should be deducting $5,000 off of that Closed/Comp property!
That is all these other agents give you! THIS IS NOT HOW YOU RUN COMPS!
Yes, yes, yes, they may doctor up this information with useless pie charts and graphs but that is really all you are getting! What is worse is that they cannot even do this correctly as they either leave certain properties out of your Comp list (either on purpose or not), they use different style houses (which is the wrong way of doing it), use “Stale” Comps (meaning houses that sold months and months ago – which is also the wrong way of pulling Comps) or they only pull “Comps” that are close in price to the property you want to buy or sell so they don’t have to worry about putting in a low offer if you are the Buyer OR they will give you only the Comps that are close to the price YOU think your property is worth!
BOTH ways are horrible and these agents do this to get you to just sign that contract! It is called “Buying a Listing” when it is done on the Seller side and the agent just wants your property as 1 of their listings so they will ask you what do you think your house is worth and then agree with you EVEN THOUGH they know the adjusted comps show your home is worth substantially less!
It is completely unethical and yet it is done all of the time!
Then, over time, the agent will stair step down the price lieing to you that the house is not selling because the price may be a little high when in fact, that agent knew the beginning sales price was way too high but they agreed with you because they just wanted the listing.
They don’t care how much time and money you lost nor care how much it will aggravate you when it takes even longer to sell!
When buying a property, here is how 1-5% of the real estate agents and brokers do it the right way:
They will pull all Closed Properties that are within 1-2 miles of your home.
All of these Closed Properties will be in the same city as your home.
All of these Closed Properties closed LESS than 90 days ago.
All of these Closed Properties are either the same house style as yours and only if possible are within 30 years old of when your home was built. This one is not as important as the others so it is things we strive for.
These very few Real Estate Agents/Brokers WILL MAKE monetary Adjustments to the Closed Price for differences between the Closed/Comp house versus your house. So, for Example, if the Closed House had 1 additional full bathroom than your house, they would deduct a certain amount off of that Closed/Comp property closing price!
THEN they will make adjustments for everything else - so many other things like # of rooms, # of bathrooms, acreage, square feet, garages, basements, condition, etc!
They will then show you all initial Comp/Closed properties they pulled to show you the full range and then lay out the Properties they used to come up with the 3-4 Adjusted Comps!
Sanford Real Estate & Investment, LLC
No Graphs, No Pie Charts, No Bullshit.
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