One Factor That Determines Your Home’s Fair Market Value
If you have ever spent time with a real estate agent or watched HGTV, you have probably heard the term “comparable”. The question is, do you know what it is or why is it used? A comparable is something real estate professionals use in order to find the fair market value of a home. This is especially helpful when someone is about to put an offer down on a home and can be used to help find the most fair and up to date price. Realtors usually find three comparable sales for the subject property to justify their price.
Can a comparable be anything? NO! Of course not! Comparing a mansion to a townhome would not be a credible comparable. In order for the comparable to be a good one, the home must match most of the specifics on the home you are trying to purchase or sell. For instance, if you are looking at a three bedroom, two bathroom home, your comparable should come as close to matching that as possible to get the best possible value.
Another rule of thumb used when looking at comparables is to ensure that the comparable is within one mile of the home you are looking at. This is important when looking at the amenities in the area such as school districts and shopping options. They want to compare properties that are as close to each other in location and structure as possible, or else they are not worth comparing.
Why do comparables even matter? In order for a bank to approve your offer on a home or even to aid helping you select a fair offer to make on a home, you have to have good comparables for the house. This is because you want to make sure that the offer you are making is fair and close to what other similar properties are selling for. If you are offering 75,000 dollars less than a similar property less than a mile away from you, then you are obviously not making a fair offer and that is not fair market value.
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