Investment jargon is ubiquitous in real estate. You may hear lenders, agents and brokers talking about real estate lingo. If you want to be a part of any type of investment in the real estate world, you will want to become familiar with the different terms used in real estate. The first thing to define is a comparable sale.
Often, comparable sales will be referred to as comps. These will be the foundation of your real estate investment and are important to understand. If you are looking at a property, be sure to ask what the comparables are for that property. Your real estate agent, or yourself, will consult a variety of factors to compare your property to other properties around you. You can find this information through various companies, the Multiple Listing Service (MLS), and even the courts and newspapers.
This includes the history of the property, past sales, sales of other homes, demographics of the area, and different trends that affect sales. Any factor that will affect your planned investment in a home is something you need to inquire about when considering your portfolio.
Why should I inquire about the sample? By doing so, you will know if you are making the right investment. Technically speaking, the value of the home should go up. Also, the value needs to be the same as other homes. If you don’t strike a balance between historical investments and neighborhood investments, you could end up paying too much.
When looking at cash flow, you should always start with comparable sales. This will give you a good idea of what’s going on with the property you’re interested in, and whether it’s worth your time and investment. Finding comparable data is the beginning of moving past the threshold and into your new home.