If you are a Metro Detroit first time home buyer you may not know some of the terminology, the jargon that real estate agents use. One of the word that you will hear me use a lot is “comps”. Comps are short for comparables. Comparables is how we determine value. A comparable is a home that has recently sold in the area that you are looking in. It is a home that is similar in style and size as yours. What may be different is the condition. By comparing the home that you are buying to recently sold homes we can at least tell whether the home is worth what you want to bid on it.
If a home that is similar in size and shape sold for $200,000 and they have listed the home you are looking at as $265,000. lt is hard to justify buying that home when it is $65,000 more than the highest price that sold in the last year. Even with major updates it still would not be worth it. That is where you have to look at the listing ticket of the “comp” to see what the condition of the home and the updates are. You then have to evaluate what the home you are looking at is worth compared to the recent sold homes.
This is a very important step when buying a Metro Detroit home. It does not matter if it is a home for sale in Commerce Township or a Brendel lake waterfront home for sale. You never want to over pay for a home. Nothing is worse than being upside down in your home the first day you own it. Of course everybody plans to stay in their home for over 5 years usually. But sometimes you have a job transfer, a divorce, a job change, or some other change that will make you have to sell your home. You do not want to be upside down when you have to sell the home.
So ask for the recent comparables when you go to put in an offer. My goal as your realtor is help you get the best financial deal possible. I would rather see you get a Metro Detroit home at a fair price than pay too much. I hope this metro Detroit home buyer tip has helped you understand what a comp is.