Why Comparable Properties Are So Important
If comp data isn’t the backbone of real estate, it certainly serves as foundational support. Brokers use comp data to identify recent transactions involving properties and spaces similar to their clients’. Investors need to know this important data.
Real estate comp data is the perfect tool for investors to value property and identify new opportunities. It’s also helpful in negotiating and identify new opportunities. But what exactly is comp data? Where can you get this vital information? And do you really need it?
Today, the market is more volatile than ever. There’s not enough properties to accommodate potential buyers or tenants in some areas but everything can change in a heartbeat. Fortunately, reviewing comp data for the area and like properties can help you predict what will likely happen down the road.
Today, we’re pulling back the curtain to help you fully understand what comp data is, what it can offer, how to use it, and where to get it.
What is comp data?
Comparable (also called “comps”) provide an outline of a transaction. They include the square footage of a property, terms, any concessions, and most importantly, the rental rate or sale amount. This comparable data, or comp data, offers the most accurate information for what the market is willing to pay for a particular property in a specific market at a given time.
Why comp data matters
When you have access to accurate comp data, you have the information needed to drive new business, more lucrative deals, better opportunities, and more overall success. Comp data provides insight as well as a powerful resource to deliver more for your prospects. Having this data also helps you set more reasonable expectations with your prospects and ensures you never walk into a negotiation blindly.
How to use comp data
To use comp data for your current deals, try to match the property involved with data gathered on similar properties.
Here are the three most important criteria to consider
- Market conditions: This refers to the current trends in the market in which a specific property exists
- Geography: Comps also consider the area in which a property is located. For example, if the price for properties in a location increase, it will drive up the comps across the entire area. This offers insight into localized markets.
- Physical characteristics: Specs on the property, such as the age of the building, building size, amenities, and physical condition, all factor into comp data, too.
It’s also important to consider the transaction history of the property associated with the deal you’re looking at. Analyzing previous transactions can help you understand how the property’s value has changed over time.
How to get comp data
There are a few ways investors and professionals can access comp data.
One way is to pore over public property records such as building permits, court records, deed registry, and zoning. You could even check loan data and legal notices—this process is incredibly meticulous and time-consuming.
Another solution is to leverage a market intelligence database. With technology that empowers you to access the right information when you need it, you can easily gain data-driven insights in just a couple of clicks.
You can always contact Cathy and she can help you analyze and give you her opinion of value.
Cathy Crowe
214-850-4527
