How to Use Comparable Sales to Determine Property Value: A Detailed Guide
Understanding the value of a property you’re eyeing is crucial, whether you’re buying, selling, or simply keeping a tab on the market. One of the most reliable ways to do this is through comparable sales, or ‘comps’. This method isn’t just a favourite among seasoned property investors; it’s the backbone of how real estate agents and property valuers ascertain property worth. Let’s delve deeper into how you can utilise this method effectively.
What Are Comparable Sales?
In simple terms, comparable sales look at the recent sale prices of similar properties within a certain radius of your subject property. By comparing these, you can gauge a realistic value for the property in question.
Your Essential Tool: The Comparable Sales Worksheet
While you could start from scratch, why reinvent the wheel? Download our Comparable Sales Worksheet here.
It’s structured to help you systematically compare properties and reach a realistic valuation. Here’s a breakdown of the worksheet and how to use it:
What to look for in a comparable property: Ideally, the comparable property should be within a few blocks or kilometres, depending on the area’s density.
Why It’s Important: The closer the comparable sale is to your subject property, the more accurate the comparison. Proximity can significantly influence property values.
Once you have found a suitable comparable property, document the following:
• Address + Distance from Subject Property:
• Sale Price + Date Sold:
• RV + % Above or Below:
• Bed + Bath + Parking:
• Year + Condition:
• Land Size + House Size
Finding comparable sales, and establishing an end value of your property can seem overwhelming at first, but with the right tools and understanding, they provide invaluable insights. The Comparable Sales Worksheet streamlines the process, guiding you towards an educated estimate of a property’s value. And remember, while comps are indispensable, coupling this with advice from real estate professionals ensures you’re making the most informed decision possible. If you’re looking for more insights and guidance, consider attending a webinar or masterclass by Wealth Mentor.
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