Comparable Sales Analysis Explained: How to Value Any Property

How do you know if a property is priced fairly? You look at comparable sales—properties similar to yours that have recently sold.

This method, called "comparative market analysis" (CMA) or "comps analysis," is the foundation of real estate valuation. Professional appraisers, real estate agents, investors, and lenders all rely on it. And you should too.

The concept is simple: similar properties should sell for similar prices. The execution, however, requires understanding what makes properties truly comparable, how to adjust for differences, and how to interpret the results.

Why Comparable Sales Matter

Unlike stocks or bonds with quoted prices, real estate has no central exchange. Every property is unique, and prices vary based on hundreds of factors. Comparable sales analysis gives you:

• Objective market value: What buyers are actually paying, not what sellers want
• Negotiation leverage: Data to support your offer or counter-offer
• Confidence in decisions: Know you're not overpaying or missing a deal
• Appraisal prediction: Lenders will use comps—see what they'll see

The 5 Criteria for Good Comparable Sales

Not every recent sale qualifies as a good comp. Professional appraisers follow strict criteria:

1. Location Proximity

Ideal: Within 0.5 miles (or same neighborhood)
Acceptable: Within 1 mile
Maximum: Same school district and similar community characteristics

Why it matters: Location accounts for up to 50% of property value. Even a few blocks can mean different school zones, walkability, traffic patterns, or neighborhood prestige.

2. Recent Sale Date

Ideal: Sold within past 3 months
Acceptable: Within past 6 months
Use with caution: 6-12 months ago
Generally avoid: Over 12 months old

Why it matters: Real estate markets move. A sale from 18 months ago reflects old market conditions. In rapidly appreciating or declining markets, even 6-month-old comps may be outdated.

3. Similar Size

Ideal: Within 10% of square footage
Acceptable: Within 20% of square footage
Adjustments required: Beyond 20% difference

Why it matters: Buyers pay per square foot, but the relationship isn't perfectly linear. Smaller homes often have higher price-per-square-foot, and very large homes can have lower per-square-foot pricing.

4. Same Property Type & Style

Compare:

• Single-family to single-family
• Townhome to townhome
• Condo to condo (preferably same building or complex)

Don't compare:

• Single-family to condo (different ownership structures, appreciation rates, and buyer pools)
• Attached to detached
• Urban high-rise to suburban garden-style

5. Similar Condition & Features

Key features to match:

• Bedroom and bathroom count (within 1 bed/bath)
• Garage spaces
• Lot size (for single-family homes)
• Age and condition
• Renovation status (updated vs. original)

Where to Find Comparable Sales

Several sources provide comp data, each with pros and cons:

Free Public Sources

• Zillow & Redfin: Easy to use, shows recent sales, but data can be incomplete or delayed
• Realtor.com: More accurate (official MLS data partner), but still consumer-facing
• County Assessor Records: Public but sometimes hard to navigate, may lack interior details
• Neighborhood Apps (Nextdoor): Sometimes residents share sale prices

Professional Sources

• MLS Access: Most comprehensive and accurate, but requires real estate license (ask your agent)
• Professional Analysis Services: Automated comp analysis with adjustments (like DwellChecker)
• Appraisal Reports: If you're refinancing or buying, you'll get one—keep it for reference

The Adjustment Process: Making Comps Comparable

Once you've identified potential comps, you must adjust for differences. This is where art meets science.

Common Adjustments & Typical Values

Square Footage:

• Calculate price per square foot of the comp
• Apply that rate to the size difference
• Example: Comp is 200 sq ft larger. Adjust comp DOWN by (200 × local $/sq ft)

Bedrooms/Bathrooms:

• Bedroom: $10,000-$30,000 per bedroom (varies by market)
• Full bathroom: $5,000-$15,000
• Half bathroom: $2,500-$7,500

Garage:

• 1-car garage: $8,000-$15,000
• 2-car garage: $15,000-$30,000
• Per additional space: $7,000-$12,000

Lot Size (for single-family):

• Varies greatly by location (suburban vs. urban)
• Estimate $1-$10 per square foot of lot difference
• Premium lots (waterfront, golf course) require larger adjustments

Condition & Updates:

• Full renovation: $30,000-$100,000+ depending on scope
• Kitchen update: $15,000-$50,000
• Bathroom update: $10,000-$25,000 per bath
• Deferred maintenance: Subtract estimated repair costs

Basement (if finished):

• Finished basement worth 50-70% of above-ground square footage
• Unfinished basement: minimal value, maybe $5-$10/sq ft

How Adjustments Work

The logic is straightforward:

• If the comp is BETTER than your subject: Adjust the comp's price DOWN
• If the comp is WORSE than your subject: Adjust the comp's price UP

You're asking: "What would this comp have sold for if it were exactly like my subject property?"

Step-by-Step: Performing a Comp Analysis

Let's walk through a complete example:

Subject Property

• Address: 123 Main Street
• Size: 2,000 sq ft
• Beds/Baths: 3 bed / 2 bath
• Garage: 2-car attached
• Lot: 6,000 sq ft
• Condition: Updated kitchen (3 years ago), original bathrooms, good condition

Comparable Sale #1

• Address: 456 Oak Avenue (0.3 miles away)
• Sold: 2 months ago for $485,000
• Size: 2,100 sq ft
• Beds/Baths: 3 bed / 2 bath
• Garage: 2-car attached
• Lot: 6,500 sq ft
• Condition: Fully renovated (1 year ago)

Adjustments for Comp #1:

• Size: Comp is 100 sq ft larger → Adjust DOWN $25,000 (assuming $250/sq ft market)
• Lot: Comp has 500 sq ft more lot → Adjust DOWN $2,500 (assuming $5/sq ft lot value)
• Condition: Comp is fully renovated, subject is not → Adjust DOWN $40,000

Adjusted price for Comp #1: $485,000 - $25,000 - $2,500 - $40,000 = $417,500

Comparable Sale #2

• Address: 789 Elm Street (0.6 miles away)
• Sold: 4 months ago for $445,000
• Size: 1,900 sq ft
• Beds/Baths: 3 bed / 2 bath
• Garage: 1-car attached
• Lot: 5,800 sq ft
• Condition: Original, well-maintained

Adjustments for Comp #2:

• Size: Comp is 100 sq ft smaller → Adjust UP $25,000
• Garage: Comp has 1-car, subject has 2-car → Adjust UP $12,000
• Lot: Comp has 200 sq ft less lot → Adjust UP $1,000
• Condition: Comp is original, subject has updated kitchen → Adjust UP $20,000

Adjusted price for Comp #2: $445,000 + $25,000 + $12,000 + $1,000 + $20,000 = $503,000

Comparable Sale #3

• Address: 321 Pine Lane (0.4 miles away)
• Sold: 1 month ago for $472,000
• Size: 2,050 sq ft
• Beds/Baths: 3 bed / 2.5 bath
• Garage: 2-car attached
• Lot: 6,200 sq ft
• Condition: Updated kitchen (5 years ago), updated master bath

Adjustments for Comp #3:

• Size: Comp is 50 sq ft larger → Adjust DOWN $12,500
• Bathrooms: Comp has extra half bath → Adjust DOWN $5,000
• Lot: Comp has 200 sq ft more lot → Adjust DOWN $1,000
• Condition: Comp has updated master bath, subject doesn't → Adjust DOWN $12,000

Adjusted price for Comp #3: $472,000 - $12,500 - $5,000 - $1,000 - $12,000 = $441,500

Interpreting the Results

Your three adjusted comps suggest a value range:

• Comp #1 (adjusted): $417,500
• Comp #3 (adjusted): $441,500
• Comp #2 (adjusted): $503,000

Analysis:

• Comp #2 is an outlier (possibly unique features or bidding war)
• Comps #1 and #3 cluster around $420,000-$442,000
• Weigh more recent sales more heavily (Comp #3 sold 1 month ago)
• Reasonable value estimate: $445,000-$455,000

Common Mistakes to Avoid

1. Using Too Few Comps

One or two comps isn't enough—outliers skew results. Use minimum 3, ideally 5-7 comparable sales.

2. Ignoring Market Trends

If the market has appreciated 5% in six months, older comps need time adjustments upward. Account for market movement.

3. Over-Adjusting

If you're making $100,000+ in adjustments, the property isn't truly comparable. Find better comps instead of stacking adjustments.

4. Emotional Adjustments

"This house has better curb appeal" isn't quantifiable unless you're a professional appraiser. Stick to objective features.

5. Comparing Different Property Types

Condos vs. single-family homes aren't comparable. Neither are urban vs. suburban, even if square footage matches.

When Comps Don't Work Well

Some properties are difficult to value using comps:

• Unique properties: Custom architecture, unusual features, landmark homes
• Rapidly changing markets: Boom or bust markets make older comps irrelevant
• Low inventory areas: Few recent sales means limited comp data
• New construction: No sold comps yet (use builder pricing + pending sales)

In these cases, consider additional valuation methods like cost approach (replacement cost) or income approach (rental income potential).

Your Comp Analysis Action Plan

1. Identify 5-7 potential comps meeting the location, timing, size, type, and condition criteria
2. Gather detailed data on each comp (size, features, sale price, sale date)
3. Create adjustment spreadsheet documenting every difference and adjustment amount
4. Calculate adjusted prices for each comp
5. Analyze the range and identify outliers
6. Determine fair market value based on the cluster of adjusted prices
7. Use this to inform your offer or negotiation strategy

Conclusion: Data-Driven Valuation

Comparable sales analysis transforms property valuation from guesswork into science. You're no longer relying on "what feels right" or trusting the seller's asking price—you're using the same methodology that banks, appraisers, and professional investors employ.

The market determines value. Comps reveal what the market is saying. Master this technique, and you'll never wonder if you're overpaying again.