Comps

What does "Comps" mean in real estate?

Comps (short for comparables) are recently sold properties that closely match a subject property in location, size, condition, features and other key characteristics. Real estate pros—appraisers, agents, buyers, sellers and lenders—use comps as benchmark sales data to estimate a property's current market value and support pricing, offers and loan decisions.

How comps are used in real estate

• Appraising property value: Appraisers analyze comparable sales (sale price, square footage, beds/baths, condition and upgrades) to estimate a home's fair market value for mortgage lending and tax assessments. They typically prioritize sales within the past 3–6 months in the same neighborhood or school district for accuracy.
• Setting a listing price: Sellers and listing agents review comps to set a competitive asking price—high enough to maximize proceeds but realistic enough to attract buyers quickly.
• Negotiating offers: Buyers use comps to determine a fair offer and avoid overpaying; sellers cite comps to justify their asking price during negotiations.
• Loan approval and underwriting: Lenders rely on comps—via the appraisal—to confirm the property supports the requested loan amount and to reduce the risk of over-lending.

Key factors when selecting comps

Effective comps should match the subject property as closely as possible. Common selection criteria include:

• Location: Same neighborhood or a close radius (often within about 1 mile).
• Size & layout: Comparable square footage and similar bedroom/bathroom counts.
• Condition: Age, level of maintenance, renovations and overall condition.
• Features: Pools, garages, lot size, HVAC, finished basements and other amenities.
• Sale timing: Recently sold—usually within the past 3–6 months; older sales may not reflect current market conditions.

Real-world examples

1. Homebuyer scenario: A buyer sees a 3-bed, 2-bath home listed at $400,000. Comps of similar homes show recent sales between $380,000 and $410,000, so the buyer offers $395,000 based on market context and property features.
2. Seller scenario: A homeowner with a renovated 1,500 sq ft, 2-bed/2-bath house reviews comps that sold around $300,000. The agent recommends listing at $310,000 to attract buyers quickly while maximizing proceeds.
3. Appraiser scenario: For a mortgage, an appraiser examines three nearby sales within 90 days with similar size and condition, concluding an appraised value of $450,000 so the lender can underwrite the loan accordingly.
4. Market trends tracking: Agents and analysts study comps over several months; rising comparable sale prices indicate a heating market, influencing pricing strategies and buyer urgency.

Tips for buyers and sellers

• Look at multiple comps (typically 3–6) rather than a single sale to get a realistic range.
• Compare homes that sold recently in the same neighborhood or school district for the best relevance.
• Adjust for obvious differences—larger lot, major upgrades or poor condition—when interpreting price gaps.
• If an appraisal comes in low relative to your offer, present relevant comps and documentation to the lender or renegotiate the price.

Summary

Comps are a foundational real estate tool for estimating property value by comparing a subject home to similar, recently sold properties. Properly selected comparables help appraisers, agents, buyers, sellers and lenders make informed pricing, offer and financing decisions grounded in current market data.