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Real Estate Agent vs. Appraiser Comparables: What's the Difference?

Carl Thulin,  Mortgage Advisor

March 7, 2022 — 5 min read

Analysis of comparable sales or "comps", is an important part of the homebuying process. Though comparable sales or "comps" are based on available data, there's more than one way to interpret this information. That means that real estate agents may perform comparables analysis differently than the licensed professionals who appraise properties. This simple guide will help you understand appraisal guidelines for comparables and how these different approaches can impact your homebuying journey.

Comparables Meaning: Understanding This Important Concept

Learning new vocabulary and concepts goes hand-in-hand with shopping for a home, and the concept we're exploring here can be especially important when it comes to your finances. Comparable properties are typically nearby homes that have sold recently and are similar in design and appeal to the home you are looking to buy. It's useful for homebuyers to do their own research into comps to make sure they don't overpay for their home. However, in a highly competitive market, such as we're in now, buyers don't always have a chance to negotiate--rather, they're competing against other buyers. This means they don't have the luxury of hammering out an agreement with the seller. Your real estate agent and mortgage advisor may be able to help with this. It's useful for homebuyers to do their own research into comps to make sure they don't overpay for their home. Your real estate agent and mortgage advisor can help with this. The first step in comps research is to identify similar homes using specific criteria:
  • Property type & size (e.g., condo vs. single-family home, overall lot size, interior square footage, etc.)
  • Location (e.g., proximity to amenities, school district, etc.)
  • Conditions of sale (e.g., if the buyer self-financed or borrowed)
  • Recency (i.e., whether the homes being compared sold under different market & economic conditions--the more recent the sale, the more relevant the information)
Couple reading paperwork in new house

Real Estate Agent vs. Appraiser Comps: Why Are They Different?

The most common reason that real estate agent comps and appraiser comps are different is that their clients are not the same. Though seller's agents are relied upon for their integrity and expertise, they are ultimately responsible for helping their clients get the best possible sale price for their property. Their interest naturally lies on the seller's side. When a seller's agent considers a listing price for the home, they may do so with a more generous interpretation, hoping to help their clients get higher offers. A realtor or real estate appraiser On the other hand, appraisers don't have a responsibility to the seller or even the buyer--their fiduciary duty is to the lender. But that doesn't mean they can be biased. Appraisers are licensed professionals governed by rules and regulations, including the Truth in Lending Act and the Uniform Standards of Professional Appraisal Practice, designed to ensure an independent, unbiased appraisal of a home's value. This all means that an appraiser's analysis of comps may be different from that of the seller's or buyer's agent. While a home's offer price is legally-binding, some real estate forms stipulate that the appraisal price must equal or exceed the agreed upon purchase price. This provides the buyers with a way out unless they have waived this protection.

Real Estate Comps vs. Appraisal Comps Guidelines for Buyers

Though homebuyers can expect professionals in their orbit to act ethically during their homebuying journey, it never hurts to do your own homework. Knowledge is power, after all, and it only takes a little bit of research to see comps for recently sold homes in your area. Just keep these key takeaways in mind: Leverage your real estate agent's expertise: Just as seller's agents are professionally bound to do the best they can for their clients, your buyer's agent has a duty to look out for your interests. Before you put down an offer, talk to your agent and find out if any recently sold comparable properties have had an appraisal gap (appraised value below contract price), or if there are any other concerns regarding comps that you should be aware of. Young couple going through paperwork at home Talk to your lender: PacRes has local branches across the USA, making our Mortgage Advisors a great resource for understanding what's going on in the local market. They may be able to provide additional insight on top of what your real estate agent says so you can prepare yourself for what's coming. Do your own research: There are sites online that make it easy to conduct a search to find comps in areas where you're thinking about buying. This is will help you assess whether an asking price is fair, or how much you might need to offer over the asking price to win the deal. Make sure you're looking at the right kind of property, and focus on properties sold within the last 3-6 months to ensure recency. Want to learn more about appraisals? Click here to read our simple guide to appraisal gaps, and be sure to speak with your Mortgage Advisor about what you can expect during the homebuying process.
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