The Myth of Comps The easiest way to explain the myth of comps is though the use of a baseball metaphor. Suppose you are a team manager and you have to decide who to play at a particular position. You have two candidates, both of whom have 50 hits. Player A amassed his 50 hits in 100 at-bats, but player B required 200 at-bats to do the same. Who do you play? Player A, of course, because his batting average is twice as high as player B’s. (For you non-baseball fans, that means that each and every time Player A comes up to bat, his chance of getting a hit is twice as great as Player B's chance.) Now, here’s the connection to comps. You are shown 3 comps of recently sold homes in your town that match your home pretty well. Based upon those comps you determine that there is a market for your home at the price those recently sold homes sold for and off you go. Good luck.

Here’s what you don’t know:

(1) You don’t know the total number of listings that were on the market in the comps price point range during the time that the comps sold. For example, you were shown 3 comps. Suppose there were only 3 listings in the entire price point and all of them sold. In baseball terms that means getting a hit every time you come up to bat. But what if there were 10 listings in the price point against 3 sales. That’s a much different matter. At the very least, it should radically change the marketing plan.

(2) You also don’t know how many of the total listings expired. I confess that using expired listings to inform a sales and marketing strategy is controversial, because some people think that an expired listing indicates that the seller wasn’t really interested in selling. I think that’s dead wrong, because in towns where there is a great deal of buyer interest and activity, there are relatively few expired listings.

So, does that mean that comps are of little value? Not at all. It does mean, however, that comps exist in a market context that needs to be fully understood. That’s why I developed Hyperlocal Market Analysis. Call me to find out more about how Hyperlocal Market Analysis will help you sell your home.