When Analyzing The Deal:
I know this may be very broad, but lets say they're both in Class B neighborhoods.
What is more important when purchasing a property, Market Value or Comps?
What is more important when selling a property, Market Value or Comps?
That depends on what you mean by "market value" verse "comps". I assume MV means competing with the current houses on the market and what they are asking/negotiating based on. I assume by comps you mean recently sold homes in the area that have closed.
I would personally look at both, but weigh heavier on the most recent comps. I listed a house for $320k and had tons of interest and a first day full price offer. "Market Value" in my opinion was $320k, possibly more if there was that much interest in the market. Low and behold the "comps" only showed it worth $295k. At the end of the day we came to an agreement in the middle, however from my REI eyes, I wish they paid more attention to the actual market and what people want/were willing to pay.
@Brian Pulaski, thank you for your response. Interesting, I believe when selling a property we are at the mercy of comps.
Example on Market Value VS Comps:
My Home, Market Value is $160k based off County Records. However a similar home in my area just sold for $185k. So I would say based on the recent Comps I could possibly sell my home for 185k. Does that make sense?
County records are not a good place to get a "value" as they are only used for tax purposes. My house has a "value" listed as $140k, but market/comp value was around $200k when I bought. The differentiations I noted above are what I see as "market" verse "comp" value, although others may disagree.
@Brian Pulaski , I've always thought that MV was based off County Records but It's definitely good to know it's not. So Market Value is what houses are worth in the neighborhood versus Comps being based off the most recent sold property similar to yours?
That is my take on it. Others may disagree but I wouldn't be using Assessors info for valuing a house.
@Brian Pulaski , now after reading your comments, I think I was trying to inform myself on the difference between Market Price and Market Value. I think I am understanding that Market Value is pretty much the same as Comps in the neighborhood. Thanks.
@Jason D. , thank you for your response. Also thank you for clarifying the difference between assessed value and market value. This is all starting to make sense, and it sure is good information to have when evaluating a property.
@Steve B. , thank you for your response.
This is all good and valuable information to know.
Do you agree that single family homes and multi-family homes (2-4), are at the mercy of comps? What I owe on my property is different from what Market value is at correct?
So I owe 80k on my home but a similar home across the street sold for 185k, does this mean my home value has increased?
County tax values are not relevant really a good indicator of market value.
Though you do need to look into the current inventory, what development is happening in a neighborhood, and how many sales occur in that price range compared to # of houses in inventory to get an idea of where you can land compared to the comps. If there is nothing on the market, pent up demand, you may be able to press up on the value of the comps. If there is a lot of inventory, and you want to sell it within 7 days of listing you might have to go down a bit from comps.
Thank you for your response.
This is good information and I will definitely keep it in mind.
@Gregorio Martinez , Comps are always what you need to base your MV/purchase/resale off of. BCAD is not always an accurate reflection of what a true value is for the property. Ultimately, whether it be for purchase or resale, the appraiser is not going to base his valuation off of BCAD. It will be based upon comparables in the area that reflect the same finish-out as your subject property. Hope this helps!