How do Comps affect and appraisal?

If a home is $145K and the other homes and the area sold for $180K -200K. How would the value of the home for $145K be affected? Would it be a great investment? What if the owner was asking $149,000. Would it still be a great Investment? I'm confused as to how comps affect appraisals...Pleas help

Your home will be compared to homes in the neighborhood and adjustments are made to those homes (typically within a 1mi radius and sold w/in 6 mos. For ex. if your house is valued at $145K and is 200 sq. ft. smaller than the ones comp'd, and the comp'd homes all are larger w/a pool, the adjustment would be made to those homes to make it similar to yours. (For ex. you would take $30,000 off of those homes for the pool and say $20,000 for the extra bedroom) and that would bring a $200K home down to roughly $150. After those adjustments, the new adjusted values are averaged from all 3-4 homes to get one average value. If your house is bigger, they make the adjustments upwards to the comps. You need a full appraisal done to get value on home. Mrtg based on purch. price or mkt value, whichever is less. If he's asking for more than it's worth, the loan will be based on mkt. value. Go to Zillow.com they'll give you a free ballpark figure of what homes in your neighborhood sold for and what yours is worth.

Comps are short for comparisons. In real estate you must compare "likes". If the $200,000 homes have 50% more area and are newer on larger lots then they aren't your "comps". A home of lesser value in a richer area may be raised slightly compared to a similar home in a poorer area. Comps are used to produce appraisals.

The house may still be at the same value as the others. The comps set a scale for dollar amount per square foot of property. The 145k house may simply be smaller, but the same price per foot.

There are too many other variables then price to determine if this is a good investment or not.

I would have to wonder WHY the comparable homes are selling for much more than the list price! The comparable homes help to determine the value of the subject property. If the comparable projects are selling for $200 the subject price should be much closer to that value if there is nothing wrong with it. Otherwise, those are not good comps.

The appraiser would look at each comparable property and adjust for the differences. Not just size of house and number of bathrooms and size of lot. They also adjust for view and busy streets and quality of construction.

A good buyers agent can help you figure out if this is a good deal. Also if you walk through 15 or 20 houses in that area and price range it is amazing the education you will get on value.

Comps are the components of an appraisal. Usually three properties are compared that are most similar to the subject property. Since in most markets finding exactly the same property is unlikely. The appraiser makes adjustments + - based on the compared property. The adjustment is either subtracted from the value when the property is inferior to the subject. IE. has no pool ($-30,000) and plus when the subject is inferior to the comparable. It is said that one must find the cheapest house in an expensive neighborhood. If you buy thousands under the normal price it will definitely effect the prices of the homes surrounding that property.

Good Luck

The home selling for $145k could be priced low for a quick sale. It still may appraise in the $180-k area. Appraisals are based on the most recent sales.

If the Seller purchased it for much less, then it's wonderful news to sell it quickly at $145k than to have it sit on the market until someone else decides to pay more.

If the Sellers are divorcing, building another house or has died, then the affected parties will want to settle the property as quickly as possible.