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Comparable Sales (Comps)
Recently sold properties similar in size, condition, and location used to determine a property's market value.
Definition
Comparable sales, or comps, are recently sold properties that are similar to a subject property in terms of location, size, condition, age, and features. Appraisers typically use three to six comps sold within the past 6-12 months and within a reasonable proximity (usually 1 mile or less). Adjustments are made for differences — if a comp has a pool and the subject doesn't, the appraiser subtracts the estimated pool value. Comps are the foundation of the sales comparison approach to valuation, which is the primary method for residential properties. Understanding comps helps investors avoid overpaying and supports accurate after-repair value estimates for renovation projects.
How This Relates to DSCR Loans
The appraisal for a DSCR loan relies heavily on comparable sales to determine property value. A strong comp set supports your desired loan amount and LTV.
Related Terms
Appraisal
A professional assessment of a property's market value, required by lenders before funding a loan.
Fair Market Value
The price a property would sell for on the open market between a willing buyer and seller.
After Repair Value (ARV)
The estimated market value of a property after planned renovations and improvements are completed.
Days on Market
The number of days a property listing has been active before going under contract.
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