Subject-To Comp Adjustments Guide
Comp adjustments sound complicated, but the core concept is simple: you're modifying a comparable sale price so that it reflects what your subject property would sell for. Every adjustment answers one question: "If the comp were identical to my subject property, how much would it have sold for?"
This guide walks through the adjustment process from start to finish, with the logic behind each step.
The golden rule: adjust the comp, not the subject
The most common misunderstanding about comp adjustments is the direction. You always adjust the comp's price to make it equivalent to your subject property. You never adjust the subject.
- If the comp has something the subject doesn't: subtract that value from the comp's price
- If the comp lacks something the subject has: add that value to the comp's price
The comp sold for a known price. You're reverse-engineering what that buyer would have paid if the comp had been identical to your subject property. That adjusted price is your estimate of what the subject is worth.
Setting up the adjustment grid
Professional appraisers use a structured grid that lists the subject property's features in one column and each comp's features in adjacent columns. For each row (feature), the difference is calculated and converted to a dollar adjustment.
A typical adjustment grid for a single-family home includes:
| Feature | Subject | Comp 1 | Adj 1 | Comp 2 | Adj 2 |
|---|---|---|---|---|---|
| Sale price | N/A | $275,000 | $262,000 | ||
| Sq ft | 1,650 | 1,800 | -$9,750 | 1,500 | +$9,750 |
| Beds/Baths | 3/2 | 3/2 | $0 | 3/2 | $0 |
| Garage | 2-car | 2-car | $0 | 1-car | +$18,000 |
| Pool | No | Yes | -$25,000 | No | $0 |
| Condition | Renovated | Renovated | $0 | Average | +$15,000 |
| Adjusted price | $240,250 | $304,750 |
This grid makes it easy to see which adjustments are driving the value estimate and whether any single adjustment is too large relative to the comp's sale price.
Deriving adjustment values
The hardest part of the adjustment process is determining the dollar value for each feature difference. There are three methods:
1. Paired sales analysis
Find two sales in the same area where the only significant difference is the feature you're valuing. The price difference between the two sales equals the adjustment value. This is the most reliable method but requires finding good pairs, which isn't always possible.
2. Market extraction
Analyze multiple sales to identify the correlation between a feature and price. If you have 20 sales and half have pools and half don't, you can calculate the average price difference between the pool group and the no-pool group. This is essentially a simplified regression analysis.
3. Cost-based estimation
Estimate what the feature costs to build or add, then apply depreciation. A new pool costs $40K to install, but in a market where pools add only $25K to value, the adjustment is $25K (market value, not cost). Cost provides an upper bound; market reaction determines the actual adjustment.
For standard adjustments in your market, our comp adjustments guide provides typical dollar ranges for common features.
Order of adjustments matters
Apply adjustments in a specific order because some adjustments interact with others:
- Property rights: Fee simple vs leasehold, easements, deed restrictions
- Financing concessions: Seller financing, below-market rate buydowns, seller-paid closing costs
- Conditions of sale: Foreclosure, short sale, estate sale, relocation sale
- Market conditions (time): Appreciation or depreciation since the comp's sale date
- Location: Neighborhood differences, lot position, view, street type
- Physical characteristics: Size, bedrooms, bathrooms, garage, pool, condition, age
The first four are "transactional" adjustments that affect the comp's sale price itself. The last two are "property" adjustments that account for physical differences. Transactional adjustments should be applied before property adjustments because they modify the baseline price that physical adjustments are calculated against.
Gross vs net adjustments
Two adjustment measures help you evaluate comp quality:
- Net adjustment: The sum of all adjustments (positive and negative combined). This shows whether the comp is generally superior or inferior to the subject.
- Gross adjustment: The sum of the absolute values of all adjustments. This shows the total magnitude of adjustments regardless of direction.
Appraisal guidelines suggest that net adjustments should not exceed 15% of the comp's sale price, and gross adjustments should not exceed 25%. Beyond these thresholds, the comp is too different from the subject to be reliable.
If gross adjustments exceed 25% of the comp's sale price, that comp should be replaced with a more similar property.
Handling unusual features
Some features don't have clear adjustment values because they're uncommon. Wine cellars, home theaters, in-law suites, and commercial-grade kitchens fall into this category. For unusual features:
- Check whether the feature adds value in your specific market (a wine cellar adds more value in Napa than in a blue-collar suburb)
- Use cost to build minus depreciation as a starting point
- Apply a market reaction discount (custom features rarely return 100% of cost)
- When in doubt, underestimate the adjustment rather than overestimate
Technology-assisted adjustments
Deal Run's comp analysis streamlines the adjustment process by showing property details side by side and highlighting the differences between your subject and each comp. The ARV calculator helps you apply adjustments systematically and see how they affect your final value estimate.
You can also use the property details view to pull accurate data on both your subject and potential comps, ensuring your adjustment grid starts with correct numbers.
Practice exercise
To build your adjustment skills, try this exercise with a property you know well:
- Pick a recently sold property in your target market
- Find 3 comps using the tightest reasonable radius
- Build an adjustment grid (use a spreadsheet or paper)
- Apply adjustments for every significant difference
- Check that your adjusted values converge (within 5-10% of each other)
- Compare your ARV estimate against the actual sale price
Repeat this exercise 10 times and you'll develop an intuitive sense for adjustment values in your market that's more valuable than any formula.
Related articles
- Comp Adjustments: A Practical Guide
- How to Run Comps Like a Pro
- How Appraisers Pick Comps
- How to Calculate ARV Step by Step