Real Estate Glossary

Comparable Sales (Comps)

Quick Answer

Comps (comparable sales) are recently sold properties similar to the subject property used to estimate market value or ARV. Good comps share the same zip code, sold within 6 months, have similar square footage (±25%), beds, baths, and property type — they form the foundation of every ARV calculation.

What is Comparable Sales?

Comparable sales (comps) are recently sold properties that share enough physical and locational characteristics with a subject property to serve as reliable market value benchmarks. In real estate investing, comps are used primarily to calculate ARV — the estimated value of a property after renovations. The quality of your comps determines the reliability of your ARV, which in turn determines your MAO and the viability of the entire deal. A strong comp is: in the same ZIP code or immediate neighborhood, sold within the last 6 months, within ±25% of the subject property's square footage, similar in bed/bath count (ideally identical), and the same property type (SFR vs. condo vs. multi-family). For ARV specifically, the best comps are renovated retail-ready homes — not distressed or bank-owned — because you are estimating what a renovated version of the subject property will sell for. DealBeast's 10-step comp selection pipeline automates this analysis, applying IQR filtering, time adjustments, and PSF normalization to deliver high-confidence ARV estimates from raw market data.

Comps Formula

ARV = Median Comp PSF × Subject Property Square Footage

Comps Example

Scenario

Finding comps for a 3/2, 1,500 sqft SFR in ZIP 78701 (Austin, TX).

Numbers

Three qualifying comps sold at $185, $192, and $197 per sqft within 6 months in the same ZIP. Median PSF = $192.

Result

ARV = $192 × 1,500 = $288,000

Frequently Asked Questions

What makes a good comp?+

A strong comp is in the same ZIP code, sold within 6 months, within ±25% of subject square footage, with the same bed/bath count, same property type, and in similar or better condition. Condition matters most for ARV — use renovated retail comps, not distressed sales.

Can you use Zillow or Redfin for comps?+

Yes — Zillow, Redfin, and MLS data are all valid sources for comps. The key is filtering properly: exclude bank-owned, short sales, and highly distressed properties when calculating ARV. DealBeast pulls and filters comp data automatically to remove these outliers.

How far back can comps be?+

Ideally within 6 months. In slower markets or when data is thin, you can extend to 9–12 months with a time adjustment factor. Beyond 12 months, market conditions may have shifted enough to invalidate the comp's usefulness.

What if there are no good comps nearby?+

When local comps are scarce, expand your search to adjacent neighborhoods with similar income levels and housing stock, widen the square footage tolerance to ±40%, or extend the time window to 12 months. Document every adjustment — lenders and buyers will ask about your methodology.

Related Terms

Arv Mao