Glossary
Comps (comparable sales)
Comps, short for comparable sales, are recent sales of similar homes near the property you are valuing. Adjusted for their differences, they are how you estimate ARV or as-is value.
Every valuation is only as good as its comps. Appraisers, agents and lenders all use them, so learning to pull and adjust comps the same way is how you avoid surprises at the appraisal.
How to pick comps
- Distance. Start within half a mile, then widen to 1 and 2 miles only if needed. Stay on the same side of major roads and school lines.
- Recency. Sales in the last 90 days are best, 180 days is fine, a year is a stretch.
- Similarity. Size within 15% to 20%, close in bed count and age, same property type.
- Condition. For ARV, use renovated sales. For as-is value, use unrenovated ones.
How adjustments work
You adjust the comp toward your house, never the other way. If the comp is better, subtract. If it is worse, add. The result is the price the comp would have sold for if it were your house.
- Comp sale price
- $305,000
- Comp has 2 full baths, yours will have 3
- +$8,000
- Comp has a 1-car garage, yours has none
- -$8,000
- Comp is 150 sq ft smaller (at $90 per sq ft)
- +$13,500
- Comp had 5% seller concessions, 3% is normal
- -$6,100
$305,000 + $8,000 - $8,000 + $13,500 - $6,100 = $312,400. Values are illustrative.
Run The Deal adjusts each comp for size, beds, baths, age, condition, garage, lot and pool, flags comps with large net or gross adjustments, and shows every adjustment so you can check it. See how to calculate ARV for the full walkthrough.
Common mistakes
- Using active listings as comps. Asking prices are not sales.
- Keeping a comp that needs adjustments over 25% of its price. Find a better one.
- Ignoring the spread. If adjusted prices are far apart, your ARV confidence is low.
Questions
How far back can comps go?
Recent is better. Sales within 90 days are strongest, 180 days is common, and a full year should be a last resort in a thin market.
Can I use comps from another neighborhood?
Only if nothing closer fits, and expect to adjust more. Buyers price by neighborhood, so crossing a boundary usually lowers confidence.
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