The term comparables is used to better determine the value an asset has when compared to others, similar to it. Real estate comparables are used in assessments to determine a house’s fair value. A list of recently sold properties, usually within the last year, in a specific area, are considered by the assessor to assess the value of property properly.
In the real estate market, comparables help a real estate agent to assess the value of a home. Looking at the most recent home sales, real estate agents better understand how properties are evaluated in an area and what the market trend is. The real estate comparables need to be comparable to the property in discussion - needs to have the same number of bedrooms, floors, bathrooms - with similar attributes as the property they represent. Usually, real estate agents look at an area of one mile around the property they evaluate at homes sold for no longer than a year to date. Typically, they use around three comparables to determine the asking price of the property assessed accurately.
During assessments, the assessor also compares the property that they are assessing with comparables. This, similarly, helps them to evaluate the value of the property as well as other determining factors. This value is used for tax purposes by municipalities or local governments to establish the proper property tax for the property.
In the lack of a real estate agent, a property owner can sell their home through a for sale by owner scenario. The best option would be to have a real estate agent, but a home seller can research these prices online since property sales are made available to the public. A home seller can search online for homes similar to the one they are selling for an accurate price. Simply put, comparables are properties similar to the subject property used to estimate the property’s value.