Comparables (Comps)
Comparables (comps) are recently sold properties similar to a subject property in location, size, features, and condition, used by appraisers and agents to estimate market value.
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Exam Tip
Adjust the COMP, not the subject. Comp Better = Subtract (CBS). Comp Inferior = Add. Use recent sales within 3-6 months.
What are Comparables (Comps)?
Comparables, commonly called "comps," are recently sold properties that are similar to a property being valued. They form the foundation of the sales comparison approach to valuation, which is the most common method for residential real estate.
The Sales Comparison Approach
| Step | Description |
|---|---|
| 1 | Identify recently sold similar properties |
| 2 | Analyze differences between comps and subject |
| 3 | Make adjustments for differences |
| 4 | Reconcile adjusted values |
| 5 | Determine estimated market value |
Ideal Comparable Characteristics
| Factor | Ideal Standard |
|---|---|
| Location | Same neighborhood or area |
| Proximity | Within 1 mile (urban) to 5 miles (rural) |
| Sale Date | Within 3-6 months |
| Size | Within 10-20% of square footage |
| Style | Same property type (ranch, colonial, etc.) |
| Age | Built within similar timeframe |
| Condition | Similar level of updates/repairs |
Adjustment Rules
| Principle | Explanation |
|---|---|
| Adjust the Comp | Never adjust the subject property |
| Superior = Subtract | If comp is superior, subtract from comp |
| Inferior = Add | If comp is inferior, add to comp |
| Bracket the Subject | Use comps above and below value |
Exam Alert
Adjustments are always made to the COMPARABLE, never the subject. If the comp is superior, SUBTRACT value. If the comp is inferior, ADD value. Remember: CBS - Comp Better Subtract!
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