When you are buying or selling in New York, recent sales of comparative apartments—or comps—are used to determine the approximate asking price of a place.
At first glance, it would seem that this data is fairly easy to access because it is publicly available on most listing sites. But you need to do more than look for places with the same number of bedrooms, same square footage, and in the same neighborhood. You (or your broker) need to take into account whether you're looking at condos or co-ops, doorman or non-doorman buildings, amenity rich new developments or no-frills walk ups—and where the apartment is located within the building–plus numerous other factors.
Finding valid comps is a "painstaking task," says Rachel Lustbader, a broker at Warburg Realty. For example, if you're selling your place, apartment 10F, the best comps for it would be the recent sale of apartments in the same building, on the same line, and within one or two floors.
John Walkup, co-founder of the real estate analytics firm UrbanDigs, says if your neighbors haven't sold in the past year, "then it’s best to branch out to the hyper-local area to find others in the neighborhood."
The goal is to strike an apples-to-apples comparison, he says. So a condo is not a comp for a co-op and neither is the 18th floor comparable to the ground floor.
It's an "imperfect science," Walkup says. Once a broker finds a comp, they'll make adjustments to the asking price of the apartment they are trying to sell (or the buyer's offer) based on its floor level, condition, and size. Placement within the building, views, outdoor space, and maintenance are also important factors.
So if you are selling your apartment, and your broker finds a comp but the main difference is that your place has a renovated kitchen and the comp does not—the broker will increase the value of the comp to compensate for the lack of renovation. "The idea is to put the comp on the same level as the target unit, to get as close to market value as possible," Walkup says. Brokers use comps to justify pricing options.
All these numbers present an objective assessment of an apartment's listing price which Sarah Minton, an agent with Warburg Realty, says is "otherwise viewed through the subjective lens of someone going through the emotional process of buying or selling."
A delay in the data
The best comp is one that reflects the market within a recent time frame, so within the past year. One big issue with comps, however, is that there's a time-lag between a contract being signed and when a deal closes. So even transactions recorded yesterday may reflect market conditions from months ago. Walkup says normally this isn't a big issue, "but in a market that's running as hot as Brooklyn or Manhattan, that poses a problem—incessant demand drives up prices faster than they can be recorded," he says.
Similarly, when the market shut down during the pandemic, there were difficulties getting accurate comps with so few sales.
Walkup says the key to solving this problem is not to look just at sold comps but also active, in contract, and off-market comps. In other words, brokers are looking at asking prices of similar apartments; how long it took for similar apartments to go into contract and whether the price was reduced; and which similar apartments ended up being taken off the market because they failed to find a buyer.
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