Be careful with comps

What is a comp?

“Comps” is the abbreviated term real estate agents use for properties considered comparable to a specific home. We use comps with sellers, trying to arrive at an appropriate list price, as well as with buyers who are considering making an offer. While no two homes are identical, location, size, condition, and other factors generally factor heavily into our decision whether to consider them comparable to the house in question. That said, there are other features that can heavily impact a property’s value that I have discovered are often overlooked by buyers. It’s not their fault! MLS listings are designed to showcase the interior space and often very little of the exterior, or less attractive spaces, like the utility closet, for example.

What should I be looking for?

The purpose of this post is to draw your attention to some of those aspects of a property that you might not realize, but that could significantly affect its value.

• Water: For those of you living in communities that have oceanfront or lakefront properties, the word “water” might have positive connotations. To be clear, the kind of water I’m talking about is the sort buyers are looking to avoid. The potential for water infiltration in the basement/flooding and/or yard swampiness are issues that home owners in suburban Philadelphia (my base) struggle with. So if you are looking at a home and comparing it to one that seems similar but sold for much less , pay attention to whether it’s in a flood plain. If the house is already sold, you may not have access to the seller’s disclosure, but it’s possible that the was water penetration in the basement. Furthermore, homes located near creeks and streams can often end up with swampy, mosquito-ridden yards. Can you see why, even if the interior of the house is comparable to one you’re looking at, the sold one could have been much less appealing?
• Noise: you can hear the highway from certain homes, which greatly reduces their value. Similarly, houses in airport flight paths or near train tracks may suffer in value compared to ones in quieter locations.
• Neighborhood: while this one seems obvious, again, MLS listings often don’t show you images of the street and surrounding homes. If the neighborhood of an otherwise comparable property isn’t comparable, it may not give you useful information. For example, if the comp is on a street with other homes of similar value, sidewalks and very little traffic, it will have a higher value than a similar house on a busy, double yellow line road with no sidewalks or street parking. Also, pay attention to the condition of the properties near the comps. If the house next door is abandoned with grass up to your waist, that will negatively impact the value of the comp. I often tell my relocating clients (who are unfamiliar with the different neighborhoods) that the google street view is a critical tool in their aresenal. Take a virtual walk up and down the street when looking at comps.
• Parking: does a comp have a garage? driveway? is there street parking? Pay attention to this important characteristic.
• The ugly stepsisters: no one wants to photograph an older boiler or electrical panel, but those systems are expensive and how new they are/what condition they are in can greatly affect what a buyer will pay for a house. Consider a comp that has an old roof, old a/c unit and original plumbing and electric. An old roof or 50-year old septic system also makes a difference. It’s like a car with a shiny exterior–that’s great, but don’t forget to look under the hood.

The goal is accuracy

The list above is by no means complete, but, rather, the first several things that popped into my mind when I thought about the features of comparable properties that my own buyers and sellers often overlook. You can develop a skewed idea of value (too high or too low) for a property if you ignore everything but what the interior of the house looks like. Sometimes, not all the pertinent data is available, but a good agent should be able to fill in most of the blanks and help you understand the appropriate adjustments to make in evaluating those properties in comparison to a specific house.

If you are relocating to the Philadelphia/Main Line area, please go to my blog page and search for posts using the relocation tag. Contact me to discuss your Philadelphia area relocation! jen@jenniferlebow.com/610 308-5973