Comparative properties

Whether you are interested in selling your property or looking to make an offer on a house, knowing whether an asking price is fair is of utmost importance. It will be even more important when your mortgage lender hires an appraiser to determine whether the house is worth the loan you're after.

The best way to determine the value of a property is to compare recent sales prices of similar properties in the area to the one you are looking at. Recent sales are best found within the last six to eight months as sales prices from over that may bear little or no relation to what is going on in area currently.

Market activity also determines how easy or difficult it is to find accurate comparisons. In a busy market, you are likely to find far more comparable properties. In a less active market finding reasonable comparisons becomes harder. Furthermore if the property you are looking at is larger or smaller than most properties in the area or has special design features, finding a comparable property is harder still. It's also necessary to know what's going on in a given sub-segment. Perhaps large, high-end homes in the area are currently selling well, but owners of smaller houses are staying holding on to their properties, or vice versa.

When looking for comparable properties, there are certain elements that are important to consider, namely:

• Area or location:- Although the ideal is to find properties in the same neighborhood as the property you are looking at, it may be necessary to look at similar neighborhoods in the general area, with homes that were built at about the same time. The more familiar you are with the characteristics that distinguish one property from another the better you'll be able to judge which properties are good comparisons.
• Amenities:- It is also important to look at the specific features of a property, whether the property has a pool, a great view, a garage and the proximity to schools and shops are all factors that determine which properties can be used as comparisons when valuing a property
• Property specifics:-The number of rooms, the total square meterage of the house, the size of the garage, and the size of the plot all make a difference in finding good comparisons.

Putting together a good selection of comparable properties is the core of any property valuation. There are several different methods employed by property professionals to calculate the property’s value from this data, however making sure that the comparisons that are used are going to give you the most accurate results is certainly the most important part of the process.