What To Look For When Researching Comparable Sales

Example of Comparables Sold

Comparable sales are important in determining the value of the properties we analyze. There are a few points to keep in mind when looking for comparable sales which I've detailed below. You also normally want to find at least three comparable sales in the past six months otherwise it may be incredibly difficult to sell your property.

Size

The target homes you are looking for should be within 20% of the size of the house. For example, if the house you are evaluating is 1000 square feet, you should look for homes that are generally between 800 and 1200 square feet.

Similar Homes

You are looking for homes that are as similar to the subject home as possible to the property you are evaluating.

Style

Look for homes that are of a similar style as the current home. For example, if you are looking at a ranch style home, look for other ranch style homes around the property. If you're looking at a split level house, look for split level houses. If you're looking at brick homes, look for other brick homes.

Recent Sales

You will want to look for the most recent home sales and work your way backwards. It is generally acceptable to look back six (6) months when looking at comparables. I The more recent the home sale though, the better the comp.

Proximity

The closer the comps are to the subject home, the better the comp. Homes on the same street, are better than homes in the same neighborhood which are better than homes in the same general area. I usually start with homes that are about 0.25 miles away and only expand outward if I can't find sufficient comps. Usually a mile is about the maximum distance away from the property you should look but sometimes, especially if you're looking for comps in a more rural area you have to look out farther. You can usually just look in the same school district for comps.

Neighborhood

Look for properties generally in the same neighborhood. The further out in distance you look for comps, the higher the chance you will be looking in a significantly higher or lower income neighborhood and thereby skew ARV results

Foreclosures & Short Sales

Foreclosures and short sales should be considered when looking at comparable sales. Although they are distressed sales, they are still completed sales nonetheless.

Pending & Listed Homes

Pending home sales and listed homes will not be considered "comps" for our purposes as they do not represent completed transactions. While they can not be considered comps, they can serve as useful references for determinants of value.

Tell me in the comments below...

What questions do you have about comps?