What Are Comps in Real Estate?
Comps (short for comparable sales or comparables) are recently sold properties that are similar to the property you're analyzing. They form the foundation of property valuation in real estate. By looking at what similar homes have sold for in the same area, you can estimate what your subject property is worth -- either in its current condition (fair market value) or after renovation (after-repair value).
Running accurate comps is the single most important skill in real estate investing. If your comps are wrong, your ARV is wrong. If your ARV is wrong, your maximum allowable offer is wrong. And if your offer is wrong, you'll either overpay for deals (losing money) or underoffer on every deal (never closing). Comps are where the entire deal analysis starts.
What makes a good comp
The best comps are as similar as possible to your subject property across these dimensions:
- Location: Same neighborhood or subdivision, ideally within 0.5 miles. Comp quality drops rapidly with distance because neighborhoods, school zones, and market conditions vary street by street.
- Size: Within 15-20% of the subject's square footage. A 1,500 sqft comp for a 2,200 sqft subject is a stretch.
- Bedrooms/bathrooms: Match or be within one bedroom and one bathroom. Bedroom and bathroom count significantly affect value.
- Age/style: Similar era of construction and architectural style. A 1960s ranch and a 2015 contemporary aren't comparable.
- Condition: Match the target condition. For ARV, use comps that are recently renovated. For current value, use comps in similar current condition.
- Recency: Sold within the last 6-12 months. Older sales may not reflect current market conditions.
- Sale type: Use arms-length transactions. Exclude foreclosures, short sales, family transfers, and other non-market transactions.
Where to find comps
The gold standard for comp data is the MLS (Multiple Listing Service). MLS data includes the most detailed and current transaction information, including photos, property details, and actual sale prices. Real estate agents have direct MLS access. Investors can access MLS comp data through platforms like Deal Run, which pulls from MLS feeds to provide accurate, current comparable sales with interactive map and grid views.
Other comp sources include county tax records (sale prices recorded with deeds), public record data platforms, and appraisal reports (which include the appraiser's selected comps).
How to analyze comps
Once you've identified 3-6 comparable sales, analyze them by looking at price per square foot, the range of sale prices, and making adjustments for differences. The most common adjustments are for size (price per sqft), bedroom/bathroom count, lot size, garage, pool, and condition differences. After adjustments, the comps should point to a relatively narrow value range for your subject property.
Experienced investors develop an intuitive sense for comp quality over time, but the fundamentals don't change: similar properties, close by, recently sold, in similar condition.