Comparative market analysis (CMA) plays an important role while making real estate property decisions. Comparables act a basis of the real estate comparative market analysis which ‘serves as a tool’ or ‘acts as a guide’ for determining the value of the real estate property. Finding the comparables is not that easy. So here we are sharing tips what to look while finding the comparables. Well, you should hire a residential property valuer or commercial property valuer to help you in evaluating the property value.
“Comparables are the recently sold similar properties to the subject property in the same area”. The comparables help to evaluate the market value of the property. It is important to find the right comparable otherwise it leads to an incorrect decision.
Here are the points one should keep in mind while finding the comparables -
Similar property - It is vital to find similar properties. Comparables are the properties that are similar to the subject property. Similar to property type, area, number of floors, amenities, bedrooms, bathrooms etc. These are the properties which can be compared to evaluate the property value.
For instance - If you own a residential property with 4 bedrooms and 5 bathrooms. Having two floors and park, hospital and schools near the property. Then you can’t compare it with commercial property. You have to find a property that is similar to the subject property. Even you should not compare single family homes with condominiums. You have to find the similar property with same property type and amenities available.
Recently - For comparable, you have to find the one which is sold in the last 3 months. As the property market condition changes every time then you can’t rely on the property price which is sold last year. So make sure to check the property must be sold in the recent months or days.
For instance - If the property is sold in last three months then only you can consider it as recently sold property. But make sure real estate property market conditions haven’t faced any big difference in those three months. As property price depends upon various factors you have to consider all of them and one of the most fluctuating ones is property market condition.
Same area - Location matters a lot in real estate property world. It is considered as the comparable should belong to the same area. Which covers one to three miles. But apart from this, you have to check if there is any major difference in the same area. If it is then you can’t include the property as comparable.
Well, finding the real estate property comparable is quite tough. Better you should focus on how to increase the property value, How to make your business more profitable, how to find better investment property and all. And you should hire a residential property valuer or commercial property valuer to find the property value and let them do the research work to find the property comparable and to evaluate the property value.