What Are Real Estate Comparables?

Real estate comparables — colloquially referred to as comps — are recent sales of similar properties that are used to determine a property’s current market value. Real estate comps serve as a pricing benchmark that reflect the dynamics of the local market; provide valuable insights into price trends; help mitigate risk for both investors and consumers; and maximize opportunities.

Who Needs Real Estate Comps & Why?

Real estate comps are crucial for buyers; sellers; real estate agents and brokers; lenders; and appraisers, among others. That’s because house comps also provide a reliable gauge for pricing strategies, negotiations, investment decisions, as well as financing and refinancing loans. Comps also offer insights into the dynamics of the local market and help individuals and professionals navigate real estate transactions.

While the main purpose of comps is to offer a reliable pricing benchmark, they fulfill slightly different roles for various real estate players such as buyers; sellers; real estate agents and brokers, appraisers; lenders; and investors.

Comp Types & Their Roles in Real Estate

Several types of comparables are used in the real estate industry, each with its own role in finetuning valuations.

  1. Sales comps are the benchmark of real estate comparables. Sales comps analyze sales of similar properties in the nearby area and can be divided into recent sales comps and pending sales comps.
  2. Listing comps analyze properties that are listed for sale, but have yet to go under contract. They can be divided into active listings and expired/withdrawn listings.

What Factors & Variables Affect Comps?

Because it’s almost impossible to find the exact same properties for comparables, there are a host of factors and variables that affect comps:

  1. Property-specific factors:
    • Location is considered both at the macro level (market, submarket or neighborhood), as well as a more localized level (street or water frontage; orientation; and neighboring properties).
    • Size includes both the square footage of the home and lot, as well as the number of bedrooms, bathrooms and other areas.
    • Condition of the property depends on the age; state of repairs; renovations; and major upgrades, whether functional or cosmetic.
    • Characteristics and amenities such as pools, garages, solar panels, home offices, green spaces and landscaping can significantly elevate the value, whereas atypical designs are often a drawback.
  2. Market conditions:
    • Supply and demand: In a seller’s market supply will be limited and prices higher, while in a buyer’s market prices might decrease
    • Interest rates: Lower interest rates create hotter markets with increased demand, while higher rates usually impact buying power.
    • Economic indicators: Consumer confidence, GDP growth and employment rates directly affect the viability of the real estate market.
    • Population: In- and out-migration directly affects supply and demand.
  3. External influences:
    • Zoning and regulations:Building codes, new zoning laws, and nearby and planned developments.
    • Market perception:A neighborhood’s desirability, which depends on infrastructure, schools, crime rates, commute times, area amenities, green spaces and more.
    • Seasonal fluctuations: Spring and summer are more active and higher-priced.
  4. Comparables selection and adjustments:
    • Selecting the right type of comparable properties and adjusting for differences in condition, size and amenities.

For example, houses of similar size, finishes, and age that are situated on similarly sized lots in the same neighborhood and feature the same amenities will likely have very close values. As such, they can provide valuable insight into pricing strategies.

However, just because two or more properties look similar on paper doesn’t mean that they are true matches in real life. For instance, they might belong to different school districts; one could be close to an area that’s zoned for commercial developments; some might be in a better overall condition than others; some may have views of green spaces or water; while others may be close to heavy traffic.

Additionally, some properties you’re considering for your comps analysis may have sold at the peak of seasonal sales activity and ended up selling for more than the asking price after a bidding war between multiple buyers. At the same time, other home comps may have sold later in the year during the least active period in your local market, such as after interest rates increased. In this case, they might have ended up selling only after a price cut.

How to Find Real Estate Comps

There are multiple approaches you can take to find accurate real estate comps, including real estate websites; multiple listing services; public records; automated valuation tools; and, of course, employing a seasoned real estate professional. Generally, it’s recommended to combine multiple approaches to increase the precision of your real estate comps.

  • Automated valuation tools

Websites like PropertyShark provide access to agile automated valuation tools (AVTs), ample property data and detailed property reports. Specifically, AVTs such as PropertyShark’s Comps tool allow users to highly customize their analyses by creating special target areas, even drawing your own area directly on a map. You can also select very specific size, age, timeframe, price, and property type ranges, as well as add and eliminate properties from your criteria.

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Due to their efficiency, consistency, speed and data-driven approach, AVTs generally provide the most accurate comps outside of what a seasoned professional can offer. Furthermore, AVTs process large volumes of current and historical sales data with advanced algorithms and, consequently, can eliminate the human errors and biases that can appear in manual valuations. AVTs can also instantly access and process real-time market and sales data, further enhancing the accuracy of your house comps.

  • Real estate websites

Real estate websites are valuable tools for running real estate comps because they provide access to a large database of property listings, both active and off-market. As a result, you can efficiently run home comps with one centralized platform, instead of gathering data from multiple sources. Additionally, real estate websites will often have search filters and at least some basic analytical tools, thereby allowing for more refined and precise results.  

However, online data can provide only limited insight without solid market knowledge and detailed information on the condition of properties used for your house comps. Therefore, it’s essential to combine both online and offline research for reliable comparables. Moreover, because not all real estate websites have the exact same coverage, it’s recommended that you research multiple reputable real estate websites.

  • Multiple Listing Services (MLSs)

These are local databases with all area listings and comprehensive information on recent transactions, listing prices and property features. They will also usually have historical data, which allows professionals to identify trends and offer clients more informed pricing advice. MLSs will also have comprehensive search filters based on property size, age, location, amenities, sale prices and more.

That said, MLSs do not include off-market sales or other types of property transfers, potentially leaving out crucial data for your house comps. Additionally, MLSs are accessible only to licensed real estate professionals. That means that the average person wondering, “What do comps in my area look like?” will have to hire a real estate agent or broker if they want comparables based on MLS data.

  • Public records

County public records comprise large volumes of valuable information and are usually free to search online. In addition to the local county assessor’s office, you may also find comps by researching deeds and other recordation documents; tax assessments; building permits; and even foreclosure filings.

Transaction documents typically include property sales information and transfer details, which can be used to identify comparable properties in terms of location, size, age and features, while sale prices help with accurate valuation comparisons. Tax assessment rolls are another good example of valuable comparables data available through public records because they represent the property value determined by the local tax assessor.

However, researching public records is time-intensive and provides limited and/or outdated information. Plus, not all county assessor’s offices have digitized documents or online databases, so you may have to gather the information via phone or email or by visiting in-person. Typically, real estate professionals enhance their public records research with expert local market insights, MLSs data analytics, valuation tools and physical inspections.

  • Hire a professional

One of safest options is to work with a real estate agent and/or an appraiser as they have access to data that the general public does not. Agents also have the experience to identify the best comparable sales for your subject property.

How to Determine Accurate Real Estate Comparables

Simply choosing similarly sized, recently sold properties nearby is not going to result in accurate home comps. Rather, you must take into account a host of other factors and make adjustments in valuations.

  1. Compare apples to apples
    • Always focus on properties that are similar in square footage; lot size; frontage; location; year built; number of bedrooms and bathrooms; condition; improvements; zoning; style; as well as amenities —even school districts, if possible. The closer the match, the more accurate the comparison.
  2. Determine price per square foot
    • Calculating the price per square foot normalizes property size differences and facilitates a more standardized comparison between properties. Simply divide the sale price of each comparable property by its square footage.
    • However, keep in mind that basing valuations simply on price per square footage will not result in reliable comps as this eliminates the influence of factors, such as property condition and amenities.
  3. Adjust for property differences
    • Because it’s nearly impossible to find fully identical comparable properties, adjusting for differences such as amenities, upgrades or deficiencies is crucial. This is particularly important when dealing with niche properties, limited stock, unique features or a slow/inactive market.
  4. Consider sale timelines
    • Properties sold within the past six months are typically considered the most relevant comparables because they best reflect current market conditions. If you need to include properties sold further back in time — perhaps as a result of decreased sales activity — you’ll have to carefully adjust for changes in market conditions.
  5. Take into account market trends
    • Market trends, such as supply and demand dynamics, help gauge whether the market is depreciating or appreciating. For example, properties in popular locations or during periods of low inventory will usually sell at higher prices, while oversaturated markets will often see lower values. As such, adjustments must be made for property appreciation and depreciation.
  6. Adjust for local market specifics
    • Recognizing the unique characteristics of the local market cannot be ignored because factors like neighborhood characteristics, area amenities, school districts and proximity to transportation hubs can significantly influence property values.
  7. Condition of properties
    • Consider the overall condition of the comparables in relation to your subject property and prioritize properties in similar condition. If a comparable property (or the target property itself) requires significant repairs or renovations, adjustments that reflect these costs are crucial.

Why Are Real Estate Comps Important?

Real estate comps are important because they provide a pricing benchmark, as well as ensure accuracy and fairness for both sellers and buyers. House comps also create negotiation leverage for real estate professionals and play a pivotal role in the appraisal and financing process. Ultimately, comparables facilitate informed decision-making, transparency and confidence.

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Eliza Theiss

Eliza Theiss

Eliza Theiss is a senior writer reporting real estate trends in the US. Her work has been cited by CBS News, Curbed, The Los Angeles Times, and Forbes among others. With an academic background in journalism, Eliza has been covering real estate since 2012. Before joining PropertyShark, Eliza was an associate editor at Multi-Housing News and Commercial Property Executive. Eliza writes for both PropertyShark and CommercialEdge. Reach her at [email protected]