The old adage holds that the three most important things in real estate are location, location, location. But judging by the importance levied on house comps, comparable sales may be the most important thing in real estate pricing.

Comps help sellers price their homes right, help buyers know how much to offer, and help appraisers estimate the value of a home. But comps are tricky – operating on a sliding scale according to the market at any given time – and they can be confusing.

With the help of Mary Jo Santistevan, who ranks in the top 1% of 24,082 real estate agents in Phoenix, Arizona, and Desiree Carroll, a top agent who sells 10% more quickly than the average Bethlehem, Pennsylvania, agent, we’ll explain what house comps are, how and where you get them, and why they’re so important when you’re pricing your home for sale.

In real estate, “comps” is a slang term for comparable sales, meaning the sales price of similar properties within a close distance. A similar property would have nearly identical key valuation features, such as square footage, lot size, number of bedrooms and bathrooms, school district, neighborhood, and more.

House comps generally include more than one recently sold property to measure your home against. By compiling a few similar properties, the goal is to determine your home’s current market value.

What factors are used when finding comps?

Several factors go into computation of accurate comparables. Among them are:

• Location – The closer the comp, the better. Home values can be dramatically different in a nearby neighborhood, or even across the street if the view is significantly better. Ideally, urban comps should be within a couple mile radius. If they’re in the same school district or near the same amenities such as parks or public transport, even better.
• Location features – Comps should include as many similarities as possible, such as proximity to shopping, restaurants, attractions such as parks and lakes, access to public transportation, and schools.
• Date of sale – Typically, sales within three to six months are considered comparable because the market can change rapidly, making older sales irrelevant.
• Home and lot size – Many homes are priced per square foot, so finding one of similar size makes for an easier comparison. It’s preferable to find a house within 10% to 20% of your home’s size. If two homes have the same number of bedrooms, but one has substantially more square footage, it paints a different picture of the home’s actual size. Similarly, if two homes have vastly different lot sizes, they aren’t truly comparable properties.
• Number of bedrooms and bathrooms – The number of bedrooms and bathrooms significantly impacts the price of a home, so it’s important to match those numbers exactly in comparable homes.
• Age of the home – Because some buyers think older homes aren’t in as good condition as new homes, or may need more work than newer homes, it’s important to find homes of a similar age to compare. It’s recommended that there is no more than five years difference in age.
• Condition of the home – Not only do you want to find a home near the same age and condition of your home, but a comp should also take into consideration upgrades, remodels, and additions.
• Special features or upgrades – Homes with commanding views, swimming pools, deluxe outdoor living spaces, pristine hardwood floors, upgraded cabinetry, or a host of other features, upgrades, and amenities will naturally be valued higher than a similar home without them.
• Taxes – Property taxes can vary from one municipality, suburb, or subdivision to the next. This is why it’s so important to have nearby comps.

How do home sellers use comps?

Knowing what similar properties in the area recently sold for helps sellers determine market value and correctly price their home for sale, divorcing a seller’s unrealistic expectations based on improvements made or an emotional attachment to the property.

By relying on real-world data as a reference point for pricing a home, with adjustments made according to competitive differences such as features, finishes, size, age, or amenities, comps have become the basis for accurately setting the asking price.

Real estate agents may compile a comparative market analysis (CMA) that analyzes local comparable sales to establish a home’s value. Although not a formal appraisal, a CMA often accurately predicts a home’s appraised value by analyzing six to 12 comps within current market trends, such as buyer’s or seller’s market, inventory level, price per square foot, and days on market.

In addition, viewing house comps can inform sellers which features to highlight in a listing.

How do homebuyers use comps?

Similarly, buyers use house comps to help them calculate a fair offer. Comps can prevent a buyer from overpaying for a home by knowing what similar properties in the area have recently sold for. House comps can be used as a negotiating tool.

Even before a buyer makes an offer, comparables help them zero-in on their target home by defining price, features, neighborhood, and other details.

A buyer uses comps to determine the value of the area, as well, according to Carroll.

• Agents rely on comps to help their clients. For sellers, comps offer a gauge for determining the correct listing price. Buyers consult comps when calculating a fair offer.
• Appraisers analyze comps in the area and consult the Multiple Listing Services (MLS) as part of their calculations to determine a home’s value, usually for the purpose of mortgage approval. Most lenders require an appraisal to make sure the home is worth the purchase price, but some sellers also use an appraiser to accurately price their home.
• Lenders use valuations as a basis for home loan terms. They will assess whether the sale price aligns with current market value and whether a mortgage loan is commensurate with the home’s true value. 

Others may also rely on comps or appraisals. For example, comps might be used to resolve contested estate settlements, insurance claims, or divorces. Carroll says trust attorneys often use comps and appraisals.

How do I find real estate comps?

You have options when it comes to finding comps, but keep in mind that some are more accurate than others and some require a little help to get them.

1. The MLS is the most common source of comps. It contains information about the property, including listing price, sale price, size, location, and days on market. This provides depth to gauge an accurate comparable sale. Carroll advises putting in “a range” when pulling comps from the MLS or you “might miss something” if the original information was put in wrong. For example, a four-bedroom house might have been mistakenly listed as a five-bedroom house. *Note that only real estate agents and appraisers may access the MLS.
2. Realtor websites may also provide comps, but Carroll warns that they can be inaccurate.
3. Appraisers, who put comparable sales data and statistical information about the appraised property, as well as sold house comps into a Uniform Residential Appraisal Report, can also be a source of house comps.
4. Title representatives have access to the title database, which contains records of all sold properties – including FSBOs (for sale by owner listings).
5. Public records contain information about home sales prices. “Public records is a big one,” Carroll states. Each county keeps records of property sales. These records are not likely to be as complete as the information gleaned from MLS listings; however, as Carroll explains, they can sometimes hold information that does not go into the MLS, which is why she always checks public records to make sure she’s getting accurate data.
6. Consumer services provide partial access to property records, including sale prices.
7. Online home value estimators (HVEs) provide general information that can be used as a jumping-off point, but all too often, they lack the level of detail needed for an accurate comp. “If you’re struggling to find comps,” Carroll points out, “they can provide a baseline.”

How can I be certain I am finding the most accurate comps?

When checking house comps, it’s important to have relevant, current information. Follow these tips to get the best results:

• Compare only sold homes – List price and sale price are not always the same. That’s why active listings are not included in comparables. Santistevan explains to her sellers that sold comps are what an appraiser uses and are what they should focus on for pricing. “Let’s just say I tell a seller that I think their home is worth about $300,000 and they tell me, ‘My neighbor’s listed for $375,000.’ Well, your neighbor hasn’t sold yet.”
• Make your search “hyper local” – Carroll begins her comp search in the same subdivision. If necessary, she widens that to the same township and then to the same school district.
• Study the photos carefully – Photos may reveal updates or upgrades that can make a difference in the comp.
• Better yet, visit the property – Photos don’t tell the whole story. Visit the property to better ascertain the level of maintenance, assess curb appeal, gauge the level of traffic, witness local attractions, and experience the neighborhood ambiance.
• Check out the area – When you visit, take time to explore the neighborhood and its amenities, such as parks, shopping, restaurants, schools, and other services. Walkability, parking, or quiet may be important aspects of the area.
• Be certain it’s the same type of home – Comps only work when they compare similarities. A mid-century modern won’t be a fair comparison for your brick colonial.
• Adjust for seasonality or market conditions – Holidays and school schedules can impact the housing market. So can inventory. Know if you’re in a buyer’s or a seller’s market. If your comp is from June and you’re listing in November, you may have to make some adjustments.
• Partner with a top agent familiar with the area – Knowing the area and its sales history can make a big difference, so it’s important to find a top agent familiar with your neighborhood.

Can I find comps in my area without a real estate agent? “Yes, you can,” Carroll acknowledges. “Will they be accurate? Sometimes.” For the most accurate comps, it’s necessary to consult the MLS database. However, only licensed real estate agents and appraisers can access it. If you are unable to get comps from either of them, you may be able to access sales records through public information.

How many comps do I need? According to Fannie Mae, at least three closed comps are required.

What do I do if there are no comparable homes? You can expand the geographical range to find a comp. If necessary, you can use the cost approach to approximate market value. This involves determining the value of the land based on area sales, plus the cost to build the same property. The property won’t be worth more than the cost of reproducing it. If the property in question was sold recently, according to Fannie Mae, it can serve as the fourth comp.

How recent do comps need to be? Most real estate agents prefer to work with comps that are three months (or less) old, but six months or more is acceptable, particularly if the property is rural or unique, making it difficult to find comparable sales, or if there are better comps. According to Fannie Mae, “It may be appropriate for the appraiser to use a nine-month-old sale with a time adjustment rather than a one month old sale that requires multiple adjustments.”

What is the biggest mistake people make when selecting comps? Mistakes occur when the person selecting them doesn’t understand how to do it, Carroll believes. “They rely on sites to come up with a house value instead of doing it themselves.”

Should I hire an appraiser? If your home has unusual features such as a generator, tennis court, or an Accessory Dwelling Unit (ADU), an appraisal can help bridge the gap of hard-to-find comps. Or if there’s a dispute over the value of a house – perhaps in an estate settlement, insurance claim, or divorce – an appraisal could resolve it.

How does an appraiser find comps? Just like real estate agents, appraisers usually check the MLS listings. They look for recent sales of homes similar in size, location, features, age, and amenities.

How far away can a comp house be? Generally, you want the comp to be as close as possible. While some lenders prefer a one-mile radius in a suburban area, Fannie Mae does not require it. Staying within the same neighborhood, school district, or zip code is helpful, but the more rural the property, the wider the search.

Conclusion: Comps help sellers get the price right

Simply put, comps are a necessary part of real estate, whether you’re the seller trying to select a reasonable listing price or you’re the buyer trying to pinpoint a fair offer.

Comps should be recent and of similar, nearby properties with as many features in common as possible. Homes should be the same style, similar age and comparable condition, with the same number of bedrooms and bathrooms, equal square footage, and equivalent lot size. This information will help you set the right list price or bid.

Knowing how important comparables are, some sellers may try to winnow through the records to come up with them on their own. HomeLight’s Home Value Estimator is a good starting point that can provide an idea of what their home is worth. This free valuation tool analyzes key points about your home and consults top agents to zero in on your home’s value.

Of course, nothing beats working with a knowledgeable, experienced real estate agent familiar with the market in your area. If you don’t have an agent, consult the HomeLight Agent Match. This free tool analyzes more than 27 million transactions and thousands of reviews to help match you with a top agent in your area who can help you with pricing and more.

Our research indicates that the top 5% of real estate agents across the U.S. sell homes for as much as 10% more than the average real estate agent. If you price it right, your home will sell — probably faster and for more money.