How Comps Work: Choosing Comparable Sales Like an Appraiser
Every valuation is only as good as its comps. The five filters, and the traps hiding inside each one.
A comparable sale (a comp) is a recently closed property similar enough to yours that its price is evidence of your value. Simple idea, and almost every valuation mistake traces back to violating it.
Appraisers apply the same five filters on every assignment. The number at the top of any report is only as good as the comp set beneath it, so learn to run the filters yourself.
The five filters
Distance
Same neighborhood, ideally the same submarket. But distance is a proxy, not the rule: a comp half a mile away in the same subdivision beats one two streets over across a school-district line. Know what boundary actually changes buyer behavior in your market.
Recency
Six months is the working standard. In a fast-moving market, a nine-month-old closing describes a different market than the one you are buying into.
Size
Stay within roughly twenty percent of the subject's living area. Price per square foot is not linear: small homes carry a higher rate than large ones, so a badly sized comp imports a badly sized rate.
Property type
Houses comp against houses, townhouses against townhouses. Different products, different buyers, different prices, even on the same street.
Condition
The filter public data cannot see, and the one that moves price most. A renovated and an original-condition version of the same floor plan routinely close tens of thousands of dollars apart.
Adjust, then weigh
No comp passes every filter perfectly. The second half of the job is adjusting for the differences that remain, and weighting tight comps more than loose ones.
If your three best comps disagree wildly after adjustment, do not average and move on. Disagreement usually means a filter was violated somewhere: a hidden condition gap, a boundary crossed, a distressed sale in the set. Find the violation before you trust the number.
Where tools fit
Software and human judgment are good at different halves of this job, and the best valuations use both.
| The job | Better done by |
|---|---|
| Assembling and filtering hundreds of closings | Software |
| Noticing what a photo reveals about condition | A trained eye |
| Knowing which boundary changes buyer behavior | You, with local knowledge |
Resideline's reports grade comps by condition from listing photos, which closes most of that gap. Still, read the comp set on every report. It is where the value comes from.
Open a CMA report on a property you know. For each comp, name which filter it passes worst. That habit, auditing the weakest filter, is what separates reading a number from understanding one.
Put this lesson to work on a live address.
See condition-graded comps in a CMA report
