What is a COMP ?

A comp [ short for comparable] is any Recently Closed Property Sale in your Neighborhood that affects the Market Value of your Property.
BUT:
Every Sale in your Neighborhood Affects the Market Value of your Property whether you like it or not. There are formulas that Appraisers use to accommodate for differences in size, conditon, and amenities between various homes. But if it is nearby and recently transacted, it is a comp! And both the Lender & the Buyer will be paying attention!


The Hard Part:
A Lender performing an appraisal, and a Prospective Buyer trying to determine what your house is worth, may have a different concept of Recent and Neighborhood.


It has been considered a rule of thumb that Lenders would accept any property that sold within the last 6 months & within 2 miles of your property as a comp for your home.


That is not entirely true. Lenders will be most interested in the closest properties to your home, and the most recent transactions. They will never ignore the closest or the most recent in lieu of what might be morefavorable comps that are further away or sold earlier.


There are, however, certain conditions when that would not be true. 
For example:
If you own a newer 4000SF Major View Property and right across the street, on the non-view side – an older 2300SF house closed escrow 3 weeks ago. In that case, a 3800SF home located 1/2 mile away that sold 3 months ago would be a more relevant comp. When the differences in Size, Year Built, and Condition are too great, the proximity to your property would not matter as much -as long as there are other reasonable sales to consider.


Another factor considered by both Buyers & Lenders is how long the property was on the market before it Sold. Frequently referred to as DOM, Days on Market is a fact that affects the importance of every comp.


You also need to be aware that not all comps are given equal weight.


Re: Neighborhood
Here in the Sunset Strip/Hollywood Hills West area of Los Angeles, we have very specific and clearly defined neighborhoods: Doheny Estates; Sunset Strip, Laurel Canyon, Mount Olympus, Nichols Canyon, and Outpost.
Each one of these areas has its own Specific Characteristics and Price Values. Even if a house in Laurel Canyon was physically less than 2 miles from a house in Sunset Strip or Mount Olympus, those 2 homes would not be very relevant comps. When there is a clearly defined pocket, that’s where you’ll find your comps! Just ask the BUYERS!


Warning: What is NOT KNOWN cannot be Considered
No Buyer, Lender, or Appraiser is ever privy to the private negotiations between a Buyer & a Seller. And it is those very terms and conditions that a Seller is willing to accept that has an extremely significant impact on the Sold Price.