Running comps — comparing a property against recently sold similar homes — is the foundation of nearly every valuation decision in real estate investing, from setting your offer price to calculating ARV to pricing a finished flip for sale. The process is the same skill applied to slightly different questions each time; here's how to do it properly.
Step 1: Define what you're actually solving for
Comps for a current, as-is offer price look different from comps for an after-repair value estimate. If you're pricing an as-is purchase, your comps should reflect similar-condition properties. If you're estimating ARV, your comps should reflect renovated, move-in-ready properties instead. Mixing these up is one of the most common comp mistakes and it skews your number in a predictable direction.
Step 2: Pull candidate comps with the right filters
- Sold, not active or pending, listings — active listings show asking price, not what buyers actually paid, and can be meaningfully different from final sale price.
- Recent sales — generally the last 3 to 6 months, tightening that window in a fast-moving market and loosening it somewhat in a slow one where fewer sales occur.
- Proximity — typically within a half-mile in a dense urban or suburban area, expanding further in rural areas where fewer comparable sales exist nearby.
- Similar size — generally within about 10–15% of the subject property's square footage.
- Similar bed/bath count, lot size, and age/construction era.
- Same market segment — avoid mixing single-family homes with condos or townhomes unless the subject property is one of those types.
Step 3: Adjust comps for differences
No comp will match perfectly. For each meaningful difference — an extra bedroom, a finished basement, a garage, a larger lot, an updated kitchen — apply a dollar adjustment to that comp's sale price to bring it in line with the subject property. Local agents and appraisers are a good source for realistic adjustment values in your specific market, since these vary too much by region for a generic number to be reliable. Adjust the comp up if it's missing a feature your subject has, and down if it has a feature your subject lacks.
Step 4: Weight the comps rather than just averaging
Not all comps deserve equal weight. Give more weight to comps that are closer in distance, more recent, and closer in size and condition; give less weight to the comps you had to stretch further to include. A simple average of five comps where two are excellent matches and three are marginal will understate what the two strong comps are telling you.
Step 5: Cross-check with price per square foot
Calculate price per square foot for each adjusted comp, then apply a blended average to the subject property's square footage as a sanity check against your adjusted-comp-based number. If the two methods produce very different results, that's a signal to dig into why — often it means one of your comps isn't as similar as it first appeared.
Where to actually pull the data
- MLS access (through an agent or your own license) is the gold standard for accuracy and completeness.
- Public sold-listing sites are a reasonable free starting point but can lag actual closing data or show automated estimates rather than confirmed sale prices.
- County recorder/assessor records confirm actual recorded sale prices, which is useful for verifying a number you found elsewhere.
- A local agent's comparative market analysis (CMA) can be a fast way to get a second, professional opinion on your own comp set.
Common mistakes when running comps
- Mixing as-is and after-repair comps for the same question, producing a number that doesn't actually answer what you need it to.
- Using comps that are too old or too far away just because they're the closest matches available, without applying appropriate caution to the result.
- Not adjusting for condition, which is one of the largest drivers of price and one of the easiest things to overlook when comparing on paper.
- Relying on a single automated valuation instead of pulling and reviewing actual comparable sales yourself.
- Ignoring active listings entirely. While sold comps set your value, active listings tell you what you're competing against right now and can signal a shifting market before enough sales have closed to show it in the data.
Frequently Asked Questions
Q: How many comps should I use?
A: Three is generally the minimum for a defensible number, but 4 to 6 well-matched comps give you a more reliable estimate, especially useful when the first few don't closely agree with each other.
Q: Should I trust an automated valuation model (Zestimate or similar)?
A: Treat these as a rough starting reference, not a final answer. They frequently miss condition, recent renovations, and hyper-local nuances that a manual comp analysis catches.
Q: How far back should sold comps go?
A: Generally the last 3 to 6 months, though this should tighten in a fast-moving market where prices shift quickly and can loosen somewhat in a slower market with fewer transactions to draw from.
Q: What if I can't find enough close comps in the immediate area?
A: Widen your radius incrementally and lean more heavily on price-per-square-foot adjustments, but flag the reduced confidence in your estimate and consider getting a professional second opinion before relying on the number for a major decision.