Comparables (Comps)
Comparables (comps) are recently sold properties similar to a subject property in location, size, features, and condition, used by appraisers and agents to estimate market value.
Exam Tip
Adjust the COMP, not the subject. Comp Better = Subtract (CBS). Comp Inferior = Add. Use recent sales within 3-6 months.
What are Comparables (Comps)?
Comparables, commonly called "comps," are recently sold properties that are similar to a property being valued. They form the foundation of the sales comparison approach to valuation, which is the most common method for residential real estate.
The Sales Comparison Approach
| Step | Description |
|---|---|
| 1 | Identify recently sold similar properties |
| 2 | Analyze differences between comps and subject |
| 3 | Make adjustments for differences |
| 4 | Reconcile adjusted values |
| 5 | Determine estimated market value |
Ideal Comparable Characteristics
| Factor | Ideal Standard |
|---|---|
| Location | Same neighborhood or area |
| Proximity | Within 1 mile (urban) to 5 miles (rural) |
| Sale Date | Within 3-6 months |
| Size | Within 10-20% of square footage |
| Style | Same property type (ranch, colonial, etc.) |
| Age | Built within similar timeframe |
| Condition | Similar level of updates/repairs |
Types of Adjustments
| Adjustment Type | Example |
|---|---|
| Location | Better neighborhood: subtract value |
| Size | Comp larger: subtract value |
| Features | Comp has pool: subtract value |
| Condition | Comp renovated: subtract value |
| Time | Market rose since sale: add value |
Adjustment Rules
| Principle | Explanation |
|---|---|
| Adjust the Comp | Never adjust the subject property |
| Superior = Subtract | If comp is superior, subtract from comp |
| Inferior = Add | If comp is inferior, add to comp |
| Bracket the Subject | Use comps above and below value |
Number of Comps Needed
| Purpose | Typical Requirement |
|---|---|
| CMA | 3-6 comparable sales |
| Appraisal | Minimum 3 (more in complex cases) |
| FHA/VA Appraisal | Minimum 3 recent sales |
Where to Find Comps
| Source | Information Available |
|---|---|
| MLS | Sales price, days on market, features |
| Public Records | Recorded sale price, deed info |
| Tax Records | Assessed value, property details |
| Online Databases | Zillow, Redfin estimates |
Exam Alert
Adjustments are always made to the COMPARABLE, never the subject. If the comp is superior, SUBTRACT value. If the comp is inferior, ADD value. Remember: CBS - Comp Better Subtract!
Study This Term In
Related Terms
CMA (Comparative Market Analysis)
Real EstateA Comparative Market Analysis (CMA) is an evaluation of similar recently sold properties (comparables) used by real estate agents to help sellers set listing prices and buyers make competitive offers.
Appraisal
Real EstateAn appraisal is a professional assessment of a property's market value, typically required by lenders before approving a mortgage to ensure the loan amount is appropriate.