Best Way to Run Real Estate Comps
Running comps (comparable sales analysis) is the foundation of every real estate investment decision. Your ARV, your MAO, and your buyer's confidence all depend on comp accuracy. Here is the step-by-step process professional investors use.
Step 1: Set your search parameters
- Distance: Start at 0.25 miles, expand to 0.5 miles if needed. Same subdivision preferred.
- Time: Sold within the last 6 months. Expand to 12 months only if needed.
- Property type: Same type (SFR to SFR, not SFR to condo)
- Size: Within 200 square feet of your subject property
- Bed/bath: Same configuration or within one bedroom
Step 2: Select 3-5 comparable sales
Pull results using comp analysis tools or MLS access. Select the 3 to 5 sales that most closely match your subject in location, size, condition, and features. Exclude outliers (foreclosure sales, family transfers, builder new construction).
Step 3: Make adjustments
No comp is identical to your subject. Adjust for differences: add value for features your comp has that the subject lacks (pool, garage, extra bedroom), subtract for features the subject has that the comp lacks. Common adjustments:
| Feature | Typical Adjustment |
|---|---|
| Bedroom (+/-1) | $5,000-$15,000 |
| Bathroom (+/-1) | $3,000-$8,000 |
| Square footage (per SF) | $30-$80 (market dependent) |
| Pool | $5,000-$15,000 |
| Garage (2-car) | $5,000-$15,000 |
| Lot size (significant difference) | $2,000-$10,000 |
| Condition (renovated vs as-is) | $10,000-$40,000 |
Step 4: Calculate adjusted values
After adjustments, your 3-5 comps should cluster within a reasonable range. Use the middle of the adjusted range as your ARV estimate. If your adjusted comps are $265K, $272K, $280K, $275K, your ARV is approximately $270K-$275K.
Step 5: Cross-reference
Check your result against other data points: county tax assessment (usually conservative), Zillow estimate (usually inaccurate but directional), and any pending/active listings (indicate current market). If multiple sources agree, your estimate is solid.
Data sources ranked
| Source | Accuracy | Cost | Best For |
|---|---|---|---|
| MLS (via agent or tool) | Highest | License or subscription | Professional analysis |
| Public records | High (but delayed) | Free | Verifying sale prices |
| Zillow/Redfin | Low-moderate | Free | Quick screening only |
| Tax assessments | Low (conservative) | Free | Floor value reference |
Bottom line
The best comp analysis uses MLS data, tight search parameters (0.25-0.5 miles, 6 months), proper adjustments for property differences, and cross-referencing with multiple sources. Use the middle of your adjusted range, not the top. Conservative ARVs protect your deals and build buyer trust. You can run this process instantly with Deal Run's free ARV calculator.