Recent sales of similar properties used to triangulate value.
Comparable sales (comps) are recent closed sales of similar properties used to estimate the market value of a subject property. Comps are the foundation of residential appraisal and a major input on commercial valuation — the most direct evidence of what buyers are actually paying for similar assets.
A good comp set has three characteristics: recent (within 6 months ideally, 12 months max), similar (same property type, size range, condition, finish level), and local (same submarket — ideally same neighborhood, definitely same school district / zoning / market). Comps from a different submarket or different property class produce misleading conclusions.
Adjustments make comps comparable. The appraiser or analyst identifies differences between each comp and the subject property — size differences (per-sqft adjustment), condition differences (deferred maintenance vs. fully renovated), feature differences (garage vs. no garage, finished basement vs. not), and adjusts each comp's sale price up or down to "make it" the subject property. The adjusted average produces the value indication.
On commercial properties, comps reflect three things: price per square foot (compares physical size), price per unit (compares apartment counts), and cap rate at sale (compares income yield). Different metrics dominate different property types: multifamily is usually priced per unit; industrial is per square foot; net-leased retail is by cap rate. The right metric is asset-class specific.
Comp manipulation is one of the most common ways pro formas get stretched. Selecting only the highest-priced comps, ignoring outliers that would hurt the value indication, using comps from a tighter submarket, or pulling list prices instead of closed sales — all distort the picture. Sophisticated diligence pulls a wide comp set, includes outliers and inferior comps, and reports the median (not the cherry-picked average).
| Subject property: 1,850 sqft, 3 bed 2 bath, finished basement | |
| Comp 1: 1,920 sqft, sold 2 months ago at $445k | |
| – Adjustment for 70 extra sqft (–$10,500) | $434,500 |
| Comp 2: 1,800 sqft, no basement, sold 4 mo ago at $415k | |
| + Basement adjustment (+$22,000) | $437,000 |
| + 50 sqft adjustment (+$7,500) | $444,500 |
| Comp 3: 1,810 sqft, comparable, sold 1 mo ago | $432,000 |
| Average adjusted comp value | $437,000 |
Recently closed sales of similar properties used to estimate the market value of a subject property. The foundation of the Sales Comparison Approach in appraisal.
Residential appraisals typically use 3–6 comps. Investors making purchase decisions should pull more (8–15) to understand the distribution before relying on averages.
Ideally within 6 months. Stale comps (12+ months old) miss market movement and should be heavily discounted or excluded.
Generally no — list prices reflect aspiration, not market. Only closed sales reflect what buyers actually paid. Listings can supplement closed comps for trend / pricing signals but shouldn't drive value.
They identify differences between each comp and the subject (size, condition, features, location) and apply per-feature adjustments — typically per sqft, per bedroom, per garage, etc. — to "convert" each comp to the subject for comparison.
Matrix uses real, recent comp evidence in our underwriting. Loans reflect what properties are actually trading for, not what sellers wish they would.
