A huge part of determining what price should we offer when purchasing a home is by looking at similar homes in the same area and find out how much they have been sold in the most recent time. It is call comparable market analysis. Now let's look at what are ways for us to find these comparable market data.
1. Public source is the go to place for most of the general public to turn to when searching for comparable properties. Public sources includes Zillow, Redfin, Realtor.com or even your local title company. What you need to be aware is that the data from these sources are typically more than one month old. Since the escrow process takes about a month, the finally sales price will not be disclosed until the escrow is closed. Before that, the property that you are looking at is at 'pending' state. In the rapidly changing market like Bay Area as we all know, the more up-to-date information the better.
2. MLS, which stands for Multiple Listing Service, is a private source where realtors have access to to upload their listings and updating status. This source has more up-to-date information as well as more private information about the sales and transactions that are not available for general public.
3. Even MLS doesn't disclose any pending transactions. Therefore, it is up to the realtor to find out what the pending transactions through professional courtesy. These can be the most valuable information you can obtain by working with realtor who have network through their sphere of influence and professional efforts.
In conclusion:
Comparable market analysis is an important way to use to determine your offer price, however it is not the only thing to consider. There are no two properties that are exactly the same. The condition of the property, the improvement done on the property will always have same difference. Therefore, adjustment will need to be applied in addition to the comparable price you researched. Also, market condition is another important factor because the value is always based on supply demand relationship. Knowing the supply demand situation in your market will give you a better idea of where your offer stands among other competitions.
