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How recent should comps be?
My husband and I are in the beginning stages of house hunting and won't really start it until April or so as we'd like to move in June/July. There are numerous "cookie-cutter" developments in our area that have homes for sale. Most of these are just outside our max, so I've saved them to see if they have any price cuts that put them in our range. Well after going back over my saved houses, I've noticed that many of them have sold in the past month for well below asking (15-20%) which puts it right in the middle of our range. Every week it seems like another house in the same community and same style comes up for sale, so I'm sure when we start our hunt in April they'll be similar inventory. I just wonder if sales in Jan/Feb. would be considered comps for when we go to buy in May or if when making offers more recent comps (30-60 days) are typically used.
I'm really happy and excited to see these houses selling in our price range but I just don't want to get my hopes up too much. It does also make me wonder a bit why these houses seem to typically be listed way higher than their sale price.
Thanks!
Re: How recent should comps be?
The most recent comps will be the ones used because they are the best indicators of current market conditions.
The reason you see houses listed higher than what they eventually sell for is because it's a common mistake for sellers to over value their homes and price it to high out of the gate. Most sellers will look at what else is on the market and price according to those "comps" when in truth, the "comps" are the prices that nearby homes have SOLD for, not what they're listed at.
It's basically not having knowledge of market conditions and the common idea that the home is worth a lot more than it is for whatever reason (for example, some sellers will price a home and over value because they put in upgrades that realistically don't add that much to the actual market value)
In your situation where there are sales very often, they'll use the most recent.
In a situation where comps sell infrequently, it's at the appraiser's/bank's discretion whether he wants to find a comp that sold further back, but located nearby or one located further away, but more recent.
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