Understanding Comparable Sales in Real Estate Appraisals
Comparable sales are the foundation of property valuation. Learn how appraisers select and analyze comps to determine your home's value.
November 28, 2025
When you receive an appraisal report, you'll see a section analyzing "comparable sales" or "comps." These are the cornerstone of the sales comparison approach—the primary method used to value residential properties. Understanding how appraisers select and analyze comps can help you better understand your property's value.
## What Are Comparable Sales?
Comparable sales are recently sold properties that are similar to the subject property in key characteristics. Appraisers use these sales to estimate what a buyer would likely pay for your property in the current market.
## The Three Criteria for Good Comps
### 1. Similar Location
Location is paramount in real estate valuation. The best comps are:
- In the same neighborhood or subdivision
- Subject to similar zoning and land use
- In comparable school districts
- With similar access to amenities and services
**Why Location Matters**
Two identical houses can have vastly different values based solely on location. A 2,000 sq ft home in a premium neighborhood might sell for $400,000, while the same house in a less desirable area might sell for $250,000.
### 2. Similar Physical Characteristics
Good comps should be similar in:
- **Size** - Within 10-20% of the subject property's square footage
- **Age** - Built within a similar time period
- **Condition** - Similar level of maintenance and updates
- **Style** - Comparable architectural style and design
- **Features** - Similar number of bedrooms, bathrooms, and amenities
### 3. Recent Sale Date
The most reliable comps are recent sales:
- **Ideal** - Sales within the past 3-6 months
- **Acceptable** - Sales within the past 6-12 months
- **Less Reliable** - Sales older than 12 months (may require time adjustments)
In rapidly changing markets, even 6-month-old sales may not reflect current conditions.
## How Appraisers Find Comps
Appraisers use multiple sources to identify potential comps:
- **Multiple Listing Service (MLS)** - The primary source for residential sales data
- **Public Records** - County assessor and recorder offices
- **Appraisal Databases** - Proprietary databases of sales information
- **Local Knowledge** - Familiarity with the area and recent transactions
## The Adjustment Process
No two properties are exactly alike, so appraisers make adjustments to account for differences between the subject property and each comp.
### Common Adjustments
**Size Adjustments**
If a comp is larger or smaller than the subject, the appraiser adjusts for the difference. For example, if homes in the area sell for $150 per square foot, a comp that's 200 sq ft larger would be adjusted downward by $30,000.
**Condition Adjustments**
A comp in superior condition might be adjusted downward, while one in inferior condition would be adjusted upward.
**Feature Adjustments**
Differences in features require adjustments:
- Extra bedroom or bathroom
- Garage spaces
- Basement finish
- Lot size
- Pool or other amenities
- View or location advantages
### Adjustment Example
**Subject Property**: 2,000 sq ft, 3 bed, 2 bath, 2-car garage, no pool
**Comp 1**: 2,200 sq ft, 3 bed, 2 bath, 2-car garage, pool
- Sale Price: $350,000
- Size adjustment: -$30,000 (200 sq ft × $150/sq ft)
- Pool adjustment: -$15,000
- **Adjusted Value**: $305,000
## The Bracketing Principle
Appraisers try to "bracket" the subject property with comps—some superior and some inferior to the subject. This provides a range of values and increases confidence in the final opinion.
**Example Bracket**:
- Comp 1 (inferior): Adjusted value $290,000
- Comp 2 (similar): Adjusted value $305,000
- Comp 3 (superior): Adjusted value $315,000
- **Subject Value Range**: $295,000 - $310,000
## Why Appraisers Don't Use Your Favorite Comp
You might wonder why the appraiser didn't use a particular sale you found online. Common reasons include:
### Not Arm's Length
Sales between family members, estate sales, foreclosures, or other non-arm's-length transactions may not reflect market value.
### Too Dissimilar
The property may differ too much in size, condition, or features to be a reliable indicator.
### Too Old
Sales from more than 12 months ago may not reflect current market conditions.
### Insufficient Information
The appraiser may not have enough details about the property to make reliable adjustments.
## Active Listings and Pending Sales
While closed sales are the primary data source, appraisers also consider:
**Active Listings** - Show what sellers are asking, indicating the upper end of the market
**Pending Sales** - Provide insight into current buyer activity and market direction
These are not given the same weight as closed sales but provide valuable context.
## Market Trends and Time Adjustments
In rapidly appreciating or declining markets, appraisers may make time adjustments to older comps to reflect market changes.
**Example**:
If the market has been appreciating at 0.5% per month and a comp sold 6 months ago, the appraiser might apply a +3% time adjustment to bring it to current value.
## The Final Reconciliation
After analyzing all comps and making adjustments, the appraiser reconciles the data to arrive at a final opinion of value. This isn't a simple average—the appraiser weighs each comp based on:
- How similar it is to the subject
- How recent the sale was
- The reliability of the data
- The size and number of adjustments required
Comps requiring fewer and smaller adjustments are typically given more weight.
## What If There Are No Good Comps?
In some situations—rural properties, unique homes, or thin markets—finding truly comparable sales is challenging. Appraisers may:
- Expand the geographic search area
- Use older sales with time adjustments
- Consider properties that are less similar but still relevant
- Give more weight to the cost or income approach
## Understanding Your Appraisal Report
When you review your appraisal report, look at the comp grid:
- **Are the comps truly similar?** - Size, age, condition, location
- **Are the adjustments reasonable?** - Do they make sense based on local market data?
- **Is there a clear pattern?** - Do the adjusted values cluster around a similar number?
## Common Questions
**Q: Why didn't the appraiser use the house down the street that sold for more?**
A: That sale may have had features your home doesn't have, or it may not be arm's length. The appraiser must use the most similar, reliable sales available.
**Q: Can I provide comps to the appraiser?**
A: Yes, you can provide information about sales you believe are relevant. The appraiser will review them and use them if appropriate.
**Q: What if I disagree with the comps used?**
A: If you believe there are errors or better comps available, you can request a reconsideration of value with supporting documentation.
## The Bottom Line
Comparable sales analysis is both an art and a science. Appraisers use their training, experience, and local market knowledge to select and analyze the most relevant sales data. Understanding this process helps you better understand your property's value and the factors that influence it.
Need a professional appraisal with thorough comp analysis? Contact Black Horn Valuations at (423) 904-6400 for accurate, reliable property valuations.
## What Are Comparable Sales?
Comparable sales are recently sold properties that are similar to the subject property in key characteristics. Appraisers use these sales to estimate what a buyer would likely pay for your property in the current market.
## The Three Criteria for Good Comps
### 1. Similar Location
Location is paramount in real estate valuation. The best comps are:
- In the same neighborhood or subdivision
- Subject to similar zoning and land use
- In comparable school districts
- With similar access to amenities and services
**Why Location Matters**
Two identical houses can have vastly different values based solely on location. A 2,000 sq ft home in a premium neighborhood might sell for $400,000, while the same house in a less desirable area might sell for $250,000.
### 2. Similar Physical Characteristics
Good comps should be similar in:
- **Size** - Within 10-20% of the subject property's square footage
- **Age** - Built within a similar time period
- **Condition** - Similar level of maintenance and updates
- **Style** - Comparable architectural style and design
- **Features** - Similar number of bedrooms, bathrooms, and amenities
### 3. Recent Sale Date
The most reliable comps are recent sales:
- **Ideal** - Sales within the past 3-6 months
- **Acceptable** - Sales within the past 6-12 months
- **Less Reliable** - Sales older than 12 months (may require time adjustments)
In rapidly changing markets, even 6-month-old sales may not reflect current conditions.
## How Appraisers Find Comps
Appraisers use multiple sources to identify potential comps:
- **Multiple Listing Service (MLS)** - The primary source for residential sales data
- **Public Records** - County assessor and recorder offices
- **Appraisal Databases** - Proprietary databases of sales information
- **Local Knowledge** - Familiarity with the area and recent transactions
## The Adjustment Process
No two properties are exactly alike, so appraisers make adjustments to account for differences between the subject property and each comp.
### Common Adjustments
**Size Adjustments**
If a comp is larger or smaller than the subject, the appraiser adjusts for the difference. For example, if homes in the area sell for $150 per square foot, a comp that's 200 sq ft larger would be adjusted downward by $30,000.
**Condition Adjustments**
A comp in superior condition might be adjusted downward, while one in inferior condition would be adjusted upward.
**Feature Adjustments**
Differences in features require adjustments:
- Extra bedroom or bathroom
- Garage spaces
- Basement finish
- Lot size
- Pool or other amenities
- View or location advantages
### Adjustment Example
**Subject Property**: 2,000 sq ft, 3 bed, 2 bath, 2-car garage, no pool
**Comp 1**: 2,200 sq ft, 3 bed, 2 bath, 2-car garage, pool
- Sale Price: $350,000
- Size adjustment: -$30,000 (200 sq ft × $150/sq ft)
- Pool adjustment: -$15,000
- **Adjusted Value**: $305,000
## The Bracketing Principle
Appraisers try to "bracket" the subject property with comps—some superior and some inferior to the subject. This provides a range of values and increases confidence in the final opinion.
**Example Bracket**:
- Comp 1 (inferior): Adjusted value $290,000
- Comp 2 (similar): Adjusted value $305,000
- Comp 3 (superior): Adjusted value $315,000
- **Subject Value Range**: $295,000 - $310,000
## Why Appraisers Don't Use Your Favorite Comp
You might wonder why the appraiser didn't use a particular sale you found online. Common reasons include:
### Not Arm's Length
Sales between family members, estate sales, foreclosures, or other non-arm's-length transactions may not reflect market value.
### Too Dissimilar
The property may differ too much in size, condition, or features to be a reliable indicator.
### Too Old
Sales from more than 12 months ago may not reflect current market conditions.
### Insufficient Information
The appraiser may not have enough details about the property to make reliable adjustments.
## Active Listings and Pending Sales
While closed sales are the primary data source, appraisers also consider:
**Active Listings** - Show what sellers are asking, indicating the upper end of the market
**Pending Sales** - Provide insight into current buyer activity and market direction
These are not given the same weight as closed sales but provide valuable context.
## Market Trends and Time Adjustments
In rapidly appreciating or declining markets, appraisers may make time adjustments to older comps to reflect market changes.
**Example**:
If the market has been appreciating at 0.5% per month and a comp sold 6 months ago, the appraiser might apply a +3% time adjustment to bring it to current value.
## The Final Reconciliation
After analyzing all comps and making adjustments, the appraiser reconciles the data to arrive at a final opinion of value. This isn't a simple average—the appraiser weighs each comp based on:
- How similar it is to the subject
- How recent the sale was
- The reliability of the data
- The size and number of adjustments required
Comps requiring fewer and smaller adjustments are typically given more weight.
## What If There Are No Good Comps?
In some situations—rural properties, unique homes, or thin markets—finding truly comparable sales is challenging. Appraisers may:
- Expand the geographic search area
- Use older sales with time adjustments
- Consider properties that are less similar but still relevant
- Give more weight to the cost or income approach
## Understanding Your Appraisal Report
When you review your appraisal report, look at the comp grid:
- **Are the comps truly similar?** - Size, age, condition, location
- **Are the adjustments reasonable?** - Do they make sense based on local market data?
- **Is there a clear pattern?** - Do the adjusted values cluster around a similar number?
## Common Questions
**Q: Why didn't the appraiser use the house down the street that sold for more?**
A: That sale may have had features your home doesn't have, or it may not be arm's length. The appraiser must use the most similar, reliable sales available.
**Q: Can I provide comps to the appraiser?**
A: Yes, you can provide information about sales you believe are relevant. The appraiser will review them and use them if appropriate.
**Q: What if I disagree with the comps used?**
A: If you believe there are errors or better comps available, you can request a reconsideration of value with supporting documentation.
## The Bottom Line
Comparable sales analysis is both an art and a science. Appraisers use their training, experience, and local market knowledge to select and analyze the most relevant sales data. Understanding this process helps you better understand your property's value and the factors that influence it.
Need a professional appraisal with thorough comp analysis? Contact Black Horn Valuations at (423) 904-6400 for accurate, reliable property valuations.