Web Content Viewer

Real Estate Comps: Definition and How To Find Them

What Are Real Estate Comps?

Real estate comps, or “comparables,” are recently sold, similar homes in a nearby community that can help establish a property’s fair market value.

They are crucial for determining listing prices, making offers, and appraisal values, and can help establish a benchmark based on actual market data, not just guesswork.

How Do Real Estate Comps Work?

Real estate comps typically consider things like the location of a house, its square footage, the number of bedrooms and bathrooms, the condition of the foundation, roof, electrical, plumbing, and heating and cooling systems, the age of the home, when the home was last sold, and especially the price at which it was sold.

Why Are Real Estate Comps Important?

Whether you’re buying, selling, or just keeping an eye on your home’s value, real estate comps can help put real numbers behind what homes like yours are selling for. Here’s how they help people in different situations:

For buyers: Real estate comps can help you make sure a home is reasonably priced so you can make a competitive offer without overpaying.
For sellers: Comps guide you toward a realistic list price based on recent nearby sales, which can help attract serious buyers and avoid pricing too high (because that makes your home harder to sell), or too low (because you could leave money on the table).
For real estate agents: Real estate professionals use comps to help set home prices for buyers and sellers, and to support the negotiation process.
For appraisers: When conducting appraisals, appraisers rely on comps as a primary method for establishing fair market value by comparing the property to recent, similar sales.
For those looking to refinance: Comps can give you an estimate of your home’s value, so you can better understand your home equity and whether refinancing is within reach.

Factors That Impact Comps

When you’re looking at real estate comps, a few key details can make the difference between a solid estimate and a misleading one. Here are factors that make for good comps:

Location: Comps work best when they’re in the same neighborhood or very close by, typically within a mile or less. Even a few blocks can make a difference if school zones, amenities, or demand change.
Recent sales: Comparable homes are most useful the more recently they were sold, as this provides information about current market trends and home prices in a community.
Size: Square footage plays a big role in pricing, so it helps when comps are close in size to the home you’re evaluating. The number of rooms and lot size can also fall into this category, as one more or fewer bedroom and a bigger lot vs. a smaller one can make a huge difference in price.
Features: Extra features can bump a home’s value up or down, depending on what buyers in that area care about. Things like a garage, a finished basement, a pool, or an updated kitchen can all affect price.
Condition: A home’s condition matters because a move-in-ready property usually sells for more than one that needs work. If a comp has major upgrades or if it needs major repairs, that can shift the price quite a bit.

How To Find Real Estate Comps

The easiest way to find real estate comps is through a real estate professional or home appraiser who has access to the Multiple Listing Service (MLS) database.

They can search the MLS database for similar homes near the home you’re looking to buy, sell, or refinance. Real estate professionals often use a one-mile radius for their search. After reviewing comparables, they can give advice on the sale price or offer price for a home.

While the real estate comps you get from a professional are generally the most accurate and reliable, you can do some research yourself. For example, you can use online home listing sites and public records to research similar homes in your community.

Important Considerations When Finding Real Estate Comps

After you learn how to find comps for your home, you should keep these tips in mind to ensure you’re looking for the right comparable homes:

Focus on sold properties, not active listings
Don’t compare your home with different property types
Visit the comps in person
Don’t over-rely on price per square foot (but don’t ignore it)
Adjust chosen comps to add or take away value based on features of your property

Using Real Estate Comps for Refinancing

Real estate comps aren’t just helpful when buying and selling. Using them for refinancing can give you a rough idea of what your home might be worth before you start comparing loan options. By looking at recent, similar homes that sold near you, you can estimate your current value and, from there, your potential home equity (your home’s value minus what you still owe on your mortgage). That number matters because lenders consider how much equity you have when you apply, and it can help you decide whether refinancing is even worth exploring.

Once you have a ballpark estimate, you can start thinking about what you’re trying to accomplish with refinancing:

Rate-and-term refinance: If your goal is to lower your rate or change your loan term, a conventional refinance could be your least expensive option.
Cash out refinance: If you want to tap into your equity to cover big expenses or save money by consolidating debt, a cash out refinance may be a good fit.
HELOC: If you’d rather keep your current mortgage but still want access to funds, a HELOC can be a flexible option, especially if you’re not sure how much you’ll need up front.

Final Thoughts: Real Estate Comps Can Help Determine Your Home’s Value

Real estate comps are one of the easiest ways to figure out property worth, whether you’re buying, selling, or refinancing. By focusing on recent, nearby sales of homes similar in size, condition, and features, you can build a realistic price range. And if your goal is to use your home’s value to plan a purchase or tap into equity, comps are a great starting point before you talk to a lender.

When you’re ready to take the next step, you can get prequalified to see what you may be able to afford as a buyer or what refinancing options might best benefit you based on your estimated home value.