What are comparable properties?

When appraisers develop an opinion of a home's value, they rely in part on comparable properties, also known as "comps." The Appraisal Foundation explained to us that knowing how comps are picked and why they matter can help homeowners make sense of their home's appraisal. It can also help you provide useful context to your appraiser and support a successful home appraisal process.

What are comps in real estate?

In real estate, comparable properties are "similar property sales, rentals, or operating expenses used for comparison in the valuation process," according to the Appraisal Institute's Dictionary of Real Estate Appraisal, 7th Edition. In other words, they're properties similar to the one being appraised, and appraisers use them to help inform their opinion of value in the home appraisal.

How do appraisers adjust for differences in comps?

Since most homes aren't the same, appraisers adjust the sale prices of comparable properties to reflect their differences from the home being appraised. These adjustments help them develop an opinion of your home's value that accounts for its unique features in the context of recent sales.

For example, say a house like yours recently sold for $250,000, but yours has a new kitchen worth $15,000. The appraiser considers what your home could sell for based on the added value of the new kitchen.

The number of available comparable properties depends on housing market activity. Appraisers may have more comps to choose from in areas with more home sales and less in others where sales activity is slower. When they have limited comps, appraisers use an approach called bracketing, which involves selecting comps of greater and lesser value alongside those of similar value.

How can I find comps for my home?

Finding the right comps means looking beyond size and bedroom count. Here are some important factors to keep in mind:

• Zoning and land use: The most crucial factor in finding comps is zoning (if applicable) and how a property can be legally used. Make sure the properties have similar zoning, like residential or commercial. To check your property's zoning classification and what it means, contact your city or county land use department.
• Location: Look for homes in similar locations with similar views and access to amenities.
• Land size and features: Compare properties with similar lot sizes and land characteristics.
• Condition and design: A well-kept home with a unique design will be valued differently than a basic home that needs repairs. Make sure your comps have similar conditions and architectural styles.
• Utilities and infrastructure: Look for comps with similar utility setups, like water and sewer systems.
• Unique features: Unique features like a pool, finished attic, or additional structures like a barn can add value to a property. Comps should include properties with similar amenities to give an accurate picture of market value.
• Market trends: Market conditions can change fast, so it's important to check when the comps were sold. That will tell you if they reflect what's happening in the market right now.

Should you share comps or other neighborhood details with an appraiser?

As a homeowner, sharing relevant comparable sales can be helpful to an appraiser. You may also know things about nearby homes that aren't in public records, like whether they need major repairs, have unique features, or why a home sold for less than expected.

If you have an upcoming appraisal inspection, take advantage of our Home Appraisal Prep Tool. It can help you organize important details about your home for your appraiser to use when comparing it to other properties.