Comping Real Estate – How Can I Value My Own House?

Homeowners are currently enjoying watching their investments reach unexpected levels in value. The pandemic saw a shortage of existing houses for sale which led to record increases in the prices of homes in the US. For all the talk of their being a bubble, there is still no sign of it bursting.

The Texas housing market in 2022 is an interesting one to investigate. The state of Texas has seen some of the biggest rises in property values in the US. It is not expected that house prices in Texas will fall soon either. The Texan job market is growing, and this has attracted an influx of new residents.

To illustrate how much the average value of homes in Texas has risen you can look toward Waco. In May 2021, the average house in Waco was worth $155,000. 12 months later, that same home was worth $247,000. A year-on-year rise of 59.4%.

But, it isn’t just Texas seeing growth like this, the whole of the US has to some degree, seen high prices rise. As a homeowner wouldn’t you be curious to see how much your home was worth now?

How Can You Value Your Own Home?

There are several methods for valuing a home. These involve using appraisers, carrying out research on similar homes sold recently, or using the Federal Housing Financing Agency’s house price index calculator.

Here are some methods for valuing a home:

  • Use a professional house appraiser
  • FHFA housing price index calculator
  • Use valuation tools online
  • Perform comparative market analysis or CMA
  • Use comparables

If you approach a real estate agent then they will often be willing to perform a comparative market analysis on your property. This will give you a relatively accurate idea of the value of your home.

If you wish to get a more detailed analysis then a professional appraiser is the most common option. Around 28% of homeowners will use a professional appraiser.

However, if you wish to value your own home then the use of comparables is one way to do so.

What Does Comping Or Comparables Refer To?

If you are thinking of selling your home or simply wish to find out its current value, it would make sense to look at similar properties in your area. This is what comping refers to. It is when a selection of recently sold homes is taken to determine the value of a similar property.

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Certain criteria will come into comping. The size of the home, the land involved, location, age, and features can all be factors when comping.

Unfortunately, comping doesn’t take into account such things as seller’s concessions so it can never be 100% accurate, but it is still a valid and useful technique for valuing your home.

Why Do You Need To Understand Your Home’s Value?

The real estate lending firm, DFW hard money, explains that understanding the value of your home means that you can leverage that value when borrowing. If you require a hard money loan to finish a construction project then you would need to know the value of your property.

Also, if you want to sell your home then it is vital to know the value before setting a selling price, especially if you are going to use the FSBO method.

However, understanding the idea behind comping and carrying out a valuation are two different things. Comping takes some research to do properly and trying to rush or skip areas will leave you with a false valuation.

How Can You Use Comping To Value Your Own Home?

It is estimated that around 56% of American homeowners have used comping to place a value on their property. Knowing the value of your home will give you a better idea of what you can afford if you are thinking of buying a new home.

You may also benefit by saving money on property tax if you can use comparables to prove your assessment was set too high. For property investors, understanding a good internal rate of return is vital, so it is important to be able to value different residential properties.

Criteria

The criteria you will need to look at are this:

  • Distance – ideally within 1/2 mile radius of your home

  • Time of sale – no more than 6 months, preferably more recent

  • Area – between +/- 20% of your property’s square footage

  • Rooms – matching number of bedrooms and bathrooms

How To Find Comparables

The MLS or multiple sales listing databases is the ideal way to find comparables. This database is accessible to real estate brokers and their assistants. Unfortunately, you may not be able to gain access to this unless you ask your real estate agent to carry out CMA themselves for you.

Fortunately, you can use local real estate agents’ websites to find comparables. These sites will often be populated by the MLS and they will show recent sales. You won’t know the sales conditions so there is still a margin of error involved but this is still your easiest option for finding comps.

How Many Comparables Do You Need?

Aim for a minimum of three comparables and a maximum of five. Try to only use sold houses as listing prices are not always a reflection of how much the final selling price will be. If the market is strong for sellers then look for the most recent sales.

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Basic Comping

To get an idea of what the value of your home is, take the comparables you have and whittle them down to just three. These should be the three properties that match your home the closest.

You can then take the middle property’s selling price as being the best match for your home and its value. Yet, this is only the most basic approach to conducting comping.

Other Criteria To Consider

If you are serious about finding out the value of your home, then a professional appraiser will always be a more accurate method than comping. How accurate your valuation is will depend on the public data that is available and how much research you put into it.

If you are looking at refinancing through alternative lending options such as hard money loans, then it pays to get the closest valuation possible. To this end, you should put in the following extra steps when using comparables.

Read The Listing Properly

Things such as upgrades can have a big effect on the selling price of a home. While one property may seem similar to yours it may have significant differences that affect the selling price.

View The Properties In Person

While you probably won’t be able to see inside your comparable properties, you can view the home from the outside. This will give you a clearer idea of the condition of the home and the garden also.

Check Out The Location

Is it a quiet street like your own or close to a busy intersection? What are the amenities like? Location will affect the selling price of a home.

Use An Online Valuation Tool

Once you have an estimate, use online property valuation calculators to see if you are in the same ballpark. Remember these are only estimated too but they can be useful for comparison.

Only Use Truly Comparable Properties

If you have a townhouse then don’t compare it to a single-family home. The properties must match as much as possible.

Summary

Comping is a relatively accurate way to judge current market value if you follow the procedures properly. Choose the most recent and most comparable property sales that you can find.

Don’t stretch your radius too far, and match the style of home too. If you can, go and see the properties and the areas they are in

Comparables are very useful when refinancing, taking out a hard money loan, looking to sell and put a price on the home, or when you want to see what you may be able to afford.

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Jonathon Spire

Jonathon Spire

Tech Blogger at Jonathon Spire

My diverse background started with my computer science degree, and later progressed to building laptops and accessories. And now, for the last 7 years, I have been a social media marketing specialist and business growth consultant.

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Jonathon Spire

I blog about a range of tech topics.

For the last 7 years I have been a social media marketing specialist and business growth consultant, so I write about those the most.

Full transparency: I do review a lot of services and I try to do it as objectively as possible; I give honest feedback and only promote services I believe truly work (for which I may or may not receive a commission) – if you are a service owner and you think I have made a mistake then please let me know in the comments section.

– Jon