When advising Smoky Mountain real estate home buyers and sellers regarding a contemplated purchase, we always look at comps to determine what a fair price is for a property that we are helping them with. The best comps are recent sales that have as many as possible characteristics in common with the subject property. Good comparable sales should, relative to the subject:
- be in fairly close proximity.
- have been sold within the last 6 months.
- be of a similar square footage.
- have a similar number of bedrooms and baths.
- be of a similar age construction.
- have as similar a design as possible.
All of these potential similarities and more are desirable to make the comps as meaningful as possible. Of course, there are always condition and quality of construction adjustments but the more like the subject, the more meaningful the comp.
When considering the purchase (or sale) of a condo, the comps aren’t across town, they are likely to be across the hallway. Not only are they in very close proximity, they often have the exact same floor plan and finished square footage. They are generally in the same building (though not always with some of the largest condo developments) so they also have the same age and design. Although the quality of views can vary based on the location within a building, in fact, the only real points of difference when evaluating a condo are often the condition and the quality of the contents since most homes here are sold fully furnished.
Because there is generally very little difference between condo units, the pricing becomes EXTREMELY important. Why would anyone spend significantly more for a condo unit than someone else is offering an identical unit for?? In fact, if the quality of the mountain views are similar, the most discrepancy that there can ever be is the cost of paint, carpet, appliances, and similar items. When a condo can be completely remodeled for $20,000, why would someone pay anything more than $20,000 less than the most attractively priced turnkey ready unit is listed for?
The moral in all of this is that it is an absolute MUST that a buyer not overpay for for the purchase of a condominium unit. If they do, they will have an extremely tough time when and if they decide to sell, because the perfect comp will be not just across town, but very possibly just down the hall…