When analyzing a property or neighborhood, real estate professionals commonly use “comps” or comparable properties. However, market statistics offer a broader perspective by evaluating the entire marketplace. These statistics help identify trends, enabling industry participants to better pinpoint potential opportunities and threats to their real estate holdings.
While both market statistics and comparables are essential tools for buying and selling real estate, it is crucial to understand that each has its own strengths and weaknesses.
What are “comps”?
Comps, short for comparables, are similar properties used to determine the value of an individual real estate property. They are invaluable tools for real estate agents, brokers, appraisers, investors, and property owners to gauge the local market at a specific point in time.
Typically, properties identified as comps share characteristics with the property being evaluated. These characteristics include location or neighborhood, building size, lot area, features and amenities, and overall condition. Adjustments are customarily made to each individual characteristic to arrive at a precise value.
According to an excerpt from an article published by FloridaRealtors.org, comps “help consumers who have already decided to buy something evaluate the different options on the market; [and] help a seller understand how their product stacks up compared to other products currently ‘on the shelf.'”
While comps are excellent for identifying value, they are not forward-looking. Consequently, users of this analysis may not fully grasp how the market has evolved over time.
Market Statistics
Due to the current state of the real estate market in the post-pandemic environment, a greater percentage of industry professionals have been using market statistics to advise their clients on buying and selling decisions. FloridaRealtors.org states “Market statistics elevate above the individual and consider the marketplace in general, looking at the health of the buyer and consumer and their ability to participate in the marketplace.”
Market statistics provide a broad picture of the marketplace as a whole and can identify trends which can be used to benefit both buyers and seller of real estate. Since trends develop over a period of time (unlike comps which are more of a snapshot in time), users of the data can better identify current market conditions as compared to that from just a few months ago.
With this rapidly changing environment that we are currently living in, assessing market trends can help identify possible market opportunities or pitfalls to buyers and sellers.
Market Stats is Practice
Home Seller Example
After 20 years of ownership, Michael and Mary Jones wish to sell their large family home as all of their children have grown. They have contact real estate agent Bob who has identified two actively listed comps and three recent sale comps in the neighborhood which are similar models and are in similar condition to Mike and Mary’s home. These comps had prices ranging from $535,000 to $565,000 with marketing time periods averaging 45 days.
Bob is an experienced broker who constantly reviews market statistics and is aware of a significant decline in the level of inventory in the Jones’s neighborhood over the past 12-months which has resulted in a trend of rising prices.
As a result of these trends, Bob recommended an listing price of $589,900 which resulted in a closed sale of $585,000 after just 5 weeks of marketing time. If Broker Bob did not review the market statistics and solely relied on the recent comparables, the Jones’s may have sold their home for much less than the $585,000 they have received.
Home Buyer Example
John and Heather Robinson are looking to purchase their first home and are interested in a three-bedroom home located within two specific neighborhoods in their local community. The Robinson’s know real estate agent Gina Marky, who will help them in the process.
Gina has looked for properties in the two neighborhoods identified by the Robinson’s and found there are nine listings available which range from $370,000 to $400,000.
Since Gina is very familiar with the market and reviews the monthly statistics published by her Realtors association, she knows that inventory levels are climbing and their is a trend of price reductions in two neighborhoods.
Gina counseled John and Heather to be patient as with the trend in the market, they can get a better deal then buying right now. After four months of patiently waiting, the Robinson’s were able to purchase a great home for $355,000 – considerably lower than that when they originally started their home search.
Do you have a property to sell?
If you have a property that you need to sell, now is the time to call Quantum Realty Advisors, Inc. for a free, 30-minute consultation to discuss your immediate needs and how we can help to address them.
On behalf of our clients and strategic partners, we have successfully sell over hundreds of residential and commercial properties in most major markets nationwide.
Our team has an extensive network of highly experienced partner brokers who can assist with all the local requirements, and we will personally be there for you every step of the way.
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