What Are Real Estate Comps?
Real estate comps (comparable sales) are recently sold properties used to estimate the market value of a subject property. Knowing how to find, filter, and use comps correctly is the single most important analytical skill for any real estate investor.
What Are Real Estate Comps?
A comparable sale (or "comp") is a recently sold property that is similar enough to your subject property — in location, size, style, condition, and features — that its sale price can be used as evidence of what your subject property is worth in today's market.
Comps are the foundation of every real estate valuation: appraisals, broker price opinions, and investor ARV estimates all rely on the same underlying principle — what did similar properties actually sell for recently? Market value is not what you hope a property is worth, or what Zillow estimates — it's what informed buyers actually paid.
The Golden Rule of Comps
A comp is only as good as its similarity to your subject property. The further a comp deviates from your property in location, size, condition, or age, the less reliable it is — and the more dangerous it becomes if used without proper adjustment.
Sold vs Active vs Pending
Not all comparable data is created equal. Understanding the hierarchy of comp types is essential to using them correctly:
Sold Comps
Properties that have fully closed and transferred ownership. These are the gold standard because they represent actual market transactions — real buyers paid real money. In disclosure markets, sold comps should lead the valuation whenever they are available and recent enough to trust.
Pending Comps
Properties under contract but not yet closed. The accepted offer price is public record in many MLS systems. Pending comps indicate where the market is heading right now — they're more current than sold data but are not final until closed.
Active Listings
Properties currently listed for sale. Active listings show what sellers are asking — not what buyers have already proven they will pay. An active listing at $320K may still close lower, sit, or reduce. That said, in non-disclosure states they can still be part of the evidence stack when paired with pending signals, neighborhood fit, and model-based value estimates.
Criteria for a Good Comp
A reliable comp must closely match your subject property across five key dimensions. The more criteria a comp fails to meet, the less weight it should receive in your analysis:
Recency: Sold Within 3–6 Months
Real estate markets move quickly. A sale from 18 months ago may not reflect current market conditions. Use the most recent sales available, and weight them more heavily. In fast-moving markets, tighten to 90 days.
Proximity: Within 0.5 Miles
Location is the most powerful driver of real estate value. Comps should be in the same neighborhood or subdivision. In dense urban areas, same block or adjacent blocks. In rural areas, you may stretch to 1–2 miles if necessary, but be cautious of school district boundaries and other location factors that create value discontinuities.
Size: Within ±20% Square Footage
Square footage is the second biggest value driver after location. A 1,200 sqft home is not a good comp for a 2,000 sqft home without significant adjustments. Tighter is better — try to stay within ±15% for your primary comps.
Bed/Bath Match
Buyers search by bedroom count. A 3/2 and a 4/2 are fundamentally different products in the market. Adjust for bed/bath differences if you must use a comp with a different configuration, but try to find same-configuration comps first.
Condition Match
This is where investor comps diverge from retail comps. For ARV, use comps that have been fully renovated — updated kitchens, bathrooms, flooring, and paint. For as-is valuation, use comps that sold in similar distressed condition. Mixing condition levels produces unreliable estimates.
How to Adjust for Differences
No comp is a perfect match. When you use a comp that differs from your subject property in some way, you must make price adjustments to account for those differences. The adjustment is simple: if the comp is superior in some way, adjust its price down; if inferior, adjust up.
Adjustment Example
Do this for 3–5 comps, then average (or weight by similarity) the adjusted values to arrive at your ARV estimate. The more strong comps you use, the better supported your number will be.
Common Comp Mistakes Investors Make
Using Active Listings as Comps
A seller listing their house for $350K is expressing hope, not confirming value. In disclosure markets, that means active listings should not outrank clean sold comps. In non-disclosure states, active listings may still inform the range — but only with more conservative assumptions and model-based support.
Ignoring Condition Differences
Using a fully renovated comp to estimate ARV is correct — but you must ensure the renovation level matches your planned renovation level. A luxury flip comp is not a valid comp for a standard investor renovation in the same neighborhood.
Crossing School District or Neighborhood Boundaries
Two houses 0.4 miles apart can have dramatically different values if they're in different school districts or on opposite sides of a major road, highway, or railroad. Always check that your comps are in the same sub-market as your subject property.
Using Too Few Comps
A single comp is not a valuation — it's one data point. If one comp sold high due to a motivated buyer, and you only use that one, you'll overestimate ARV. Use 3–5 comps minimum, and throw out clear outliers (properties with unique features that explain the price anomaly).
Not Verifying Comp Details
MLS data contains errors. A comp listed as 1,800 sqft might actually be 1,600 sqft when you pull the tax record. Always cross-reference sqft, bed/bath count, and lot size against county tax records before relying on a comp.
ARV Comps vs As-Is Comps
As an investor, you need two different sets of comps to fully analyze a deal:
ARV Comps
Used to determine what the property will be worth after renovation. You're looking for fully updated, retail-condition homes that have sold recently in the same area.
As-Is Comps
Used to estimate what the property would sell for today without renovation — helpful for understanding your floor price and verifying you're not overpaying for the distressed asset.
The Investor's Value Spread
The gap between your as-is value and your ARV is the raw material of your deal. Subtract your rehab cost from this spread and you're left with your value creation — the foundation of your profit. A deal where as-is = $130K and ARV = $280K has $150K of spread to work with, which is why distressed properties are the primary target for investors.
Frequently Asked Questions
Where do I find sold comp data?
The most accurate source is MLS data, which is accessible through a real estate agent or an agent-licensed platform. Alternatives include Redfin, Zillow (using sold filter), PropStream, and county tax records. MLS data is the gold standard because it contains the most detail and is most accurate on condition and features.
How many comps do I need?
Use at least 3 strong data points, ideally 4–5. In disclosure markets that usually means sold comps. In non-disclosure or thin-data markets, the set may include active, pending, and modeled evidence — but you should widen the valuation range and document why the support is weaker.
What if there are no good comps in my area?
In rural or low-turnover markets, you may need to expand to 1–2 miles and 12 months of sales history. Document the lack of nearby comps and apply larger adjustments for location differences. You can also lean more heavily on price per square foot analysis rather than whole-property comparison.
Do appraisers use the same comps as investors?
Appraisers follow USPAP (Uniform Standards of Professional Appraisal Practice) guidelines, which generally align with investor criteria: recent, nearby, similar size, similar condition. In non-disclosure states, both investors and lenders may rely more heavily on agent insight, MLS context, and modeled value signals because sold-price visibility is weaker. When possible, have an appraiser review your ARV before closing on a major deal.
How does price per square foot help with comps?
Price per square foot (price ÷ sqft) is a quick normalization tool. If comps are selling for $160–$175/sqft for renovated 3/2s in your target neighborhood, and your subject property is 1,600 sqft, your ARV range is $256K–$280K. This is a useful sanity check on your detailed comp analysis.
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