What are comps?
Comps are a real estate valuation method using comparable properties as the basis for estimating the value of a subject property. Running comps is a skill that anyone can learn and a skill that improves with practice and repetition. Producing accurate and conservative comps is extremely important to avoid real estate investments that do not provide a satisfactory return on investment.
How to run comps?
To run comps, you should find 3 to 5 properties within a 1 mile or less radius that have sold within the last 6 months and match the profile of the subject property you are valuing (i.e. year built, number of bedrooms, number of bathrooms, sq. ft., lot size, stories). If these constraints are not practical, then you can expand your radius and timeline.
Next you add or subtract value from your subject property based on objective differences between the subject and the comparable property. For example, remove $10,000 if the comparable property has a new roof and the subject property needs a roof replacement.
How accurate are Zillow and Redfin estimates?
In some cases Zillow's Zestimate and Redfin's estimated house values are accurate but they do not have enough knowledge of the property condition to provide an accurate or relevant estimate in many cases. These estimates are especially inaccurate for houses that were built more than 30 years ago. You will notice these estimates are more reliable for communities built recently by a common builder with similar floor plans and lot size.