Real Estate Comps: The (ULTIMATE) Guide

If you’ve been in the real estate industry for a while, then you’ve most likely heard of “Real Estate Comps.”  If you haven’t heard of “Real Estate Comps,” then it’s time to get fully acquainted right now!

What you are about to learn in this article will teach you several different things, like how to find comps in your area or neighborhood, how to find comps without a realtor, how to look up comps online for free, and the Comp Criteria we use at Real Estate Skills. The Real Estate Skills Comp Criteria has been responsible for accurately analyzing property & generating millions in real estate investing profits for years.

By the end of this article, you’ll be able to find real estate comps to determine the value of any house, and you will fully understand the principles that the best real estate investors in the world use to determine home value estimates.

Whether you are a Real Estate Wholesaler, Fix & Flipper, Homeowner looking to sell your house, a Real Estate Investor honing your skills, or a Real Estate Agent looking to be sharper at comping properties, you will all find value in this article.

• What Are Comps In Real Estate?
• Who Uses Real Estate Comparables?
• How To Find Real Estate Comps
• Why Do I Want To Find Real Estate Comps For My House?
• What To Consider When Finding Real Estate Comps
• Why Would I Want To Determine The Future Value Of My Home?
• How To Run Comps On MLS
• How To Look Up Real Estate Comps?
• What To Do If There Are No Comparable Properties?

What Are Comps In Real Estate?

Let’s go over the comps definition for real estate. “Comps” is short for the word “comparables.” Real Estate Professionals use real estate comps to appropriately determine the current house value estimate of a property, and also the future house value estimate of a property.

Until recent years, we used to have to rely on Realtors & Appraisers to use real estate comps to determine the house value. Thanks to technology, we don’t need to necessarily use Realtors & Appraisers to determine the value of a house anymore.

Quick note: There are many words & phrases used for finding comps. We know how Real Estate Lingo can get confusing so in order to steer clear and not confuse you, let us point out the most common phrases used for finding real estate comps, that essentially, all mean the same thing.

These are the phrases that all real estate professionals use interchangeably for finding real estate comps (we’ll probably use a few of these different variations as you read through the article):

How to find real estate comps / finding real estate comps

How to get real estate comps / getting real estate comps

How to pull real estate comps / pulling real estate comps

How to run real estate comps / running real estate comps

How to look up real estate comps / looking up real estate comps

How to determine real estate comps / determining real estate comps

How to check for real estate comps / checking for real estate comps

How to calculate real estate comps / calculating real estate comps

How to read real estate comps / reading real estate comps

How to search real estate comps / searching real estate comps

All of these different keywords and phrases boil down to the same thing: using past historical sales data of real estate sales to determine the current or future value of a property.

Who Uses Real Estate Comparables?

House comps are used by anyone looking to determine the value of a new home. Real estate comps can be used by homeowners looking to estimate the value of their current residence to set the listing price in case they want to sell. Or they can also be used by home shoppers looking to determine whether the asking price of a home is fair.

Comps can also be used by real estate professionals, such as real estate agents, to help their clients determine a fair listing price or offer. Plus, they're even used in the actual home appraisal process to determine the exact value of a home. 

Although an appraiser will rely on a more comprehensive array of factors other than just comps to determine an official value. But basically, anyone looking to get a fair estimate of the value of a particular home may use real estate comps to do so.

How To Find Real Estate Comps

Finding real estate comps is not as complicated as you might think. There is plenty of data available that anyone can access to locate recent sales similar to the subject property. Here is a closer look at finding comps.

How To Find Real Estate Comps For Your Home?

Finding real estate comps is as simple as looking for similar properties to your own that have recently been sold. You can find recently sold homes by looking on Zillow or referencing local property records to find similar sales in the area. Or, if you're working with a real estate agent, you can have them pull MLS comps for you.

Look for homes with a similar number of bedrooms, square feet, and lot size. Also, be sure you're looking at the same type of housing. So if you own a single-family home, don't look at townhouses and vice versa.

It may not be possible to find homes that are an exact match but look for three to five roughly similar properties and the final sales price. Then, divide that by the square footage of each home by the sales price to determine the general cost per square foot.

Then take the average price per square foot of each of the comps you pulled (if they are radically different, you may need to look at additional comps) and multiply it by the square footage of your own home. There are home value calculators available online to help you with this process. Doing so will give you an approximate valuation of your property based on the available market data.

How To Find Real Estate Comps With A Realtor?

You can also use a Realtor, Real Estate Agent, or Broker to find real estate comps for your subject property. Usually, the real estate professional will compile the comps into a data sheet called a "CMA." 

CMA stands for Comparative Market Analysis. CMA's are commonly put together at no charge for homeowners who are using a Realtor's, Real Estate Agent's, or Broker's services for buying/selling a home.

How To Get Real Estate Comps Without A Realtor?

There are 2 Main Ways to Find Comps For Real Estate Without A Realtor:

1. The MLS (Multiple Listing Service)
2. Public Real Estate Websites

Let's dive into each one: 

How To Find Real Estate Comps Online:

1. The MLS (Multiple Listing Service)

So, what’s the Multiple Listing Service? The Multiple Listing Service is the database of ALL houses on the market in your area! Not just active properties, but hoards of SOLD properties, which are comps that you need to determine the house value.

The MLS was created by real estate professionals in order to have a database of property values and to effectively show all the properties on the market.

The MLS in your area is accessible through an online database with usually 2 main ways to get access: 1) Being a licensed real estate agent/broker, or 2) Being an unlicensed real estate assistant.

The Pros of the MLS are that it's thorough & robust with real estate market data in your area, making it easy for getting real estate comps. The housing value market history goes back to when the MLS was created in your area, which for some regions is 10+ years. 10+ years of market data at your hands to help you in real estate analysis! I'm sure you're starting to realize how powerful the MLS can be for you & your real estate business...

The Cons are that the MLS is not easily accessible as other forms of getting comps. Also, it is not necessarily free. Typically, it costs about ~$25 a quarter (every 3 months) for unlicensed assistant access and can be more expensive than that if you are a licensed real estate agent or broker.

Here’s a great quote from Wikipedia on why the Multiple Listing Service is so powerful:

“MLS systems contain hundreds of fields of information about the features of a property. These fields are determined by real estate professionals who are knowledgeable and experienced in that local marketplace, whereas public real estate websites contain only a small subset of property data.”

The MLS is KING when it comes to finding out information about a property because it has been updated for years by real estate professionals who are experts in your area on real estate valuations. By utilizing the MLS, you can look up past historical sales data to easily find comparable properties.

A lot of Multiple Listing Service systems have sophisticated tools for finding comps, such as search & filtering functionality, radius tools to easily look up comps around your subject property, and alerts to be notified if specific properties have any changes in value, sell, or get under contract.

Referring back to the quote from Wikipedia, typically public real estate websites try to pull & retrieve their information from the MLS to populate their websites. Once again, this is why the MLS is the best when it comes to finding comps because its data is the most complete when compared to public real estate websites which can have impartial information.

Even though public real estate websites like Redfin.com, Zillow.com, and Realtor.com may not have as much data as the MLS itself, the public real estate websites are easier to access than the MLS.

The Pros definitely outweigh the Cons with the MLS making it the best-paid way to find real estate comps online.

Let's dive into the other ways for finding real estate comps:

How To Find FREE Real Estate Comps Online:

2. Public Real Estate Websites, such as:

• Redfin.com
• Zillow.com
• Trulia.com
• Realtor.com

These are public websites you can use to access historical sales data in your area/neighborhood and to look up real estate comps around your subject property. If you do not have access to the MLS in your area, then the websites listed above are phenomenal secondary resources for finding your comps!

(Here's an image of the search functionality for finding real estate comps using Zillow. Source: Zillow)

How To Find Real Estate Comps With An Appraiser?

So, what's the role of an Appraiser? According to the Appraisal Institute: 

“The role of the appraiser is to provide objective, impartial, and unbiased opinions about the value of real property—providing assistance to those who own, manage, sell, invest in, and/or lend money on the security of real estate. Appraisers assemble a series of facts, statistics, and other information regarding specific properties, analyze this data, and develop opinions of value.”

An appraiser is a professional you can pay in order to get the current value of a real estate asset. Appraisers are commonly used by banks & lenders to find the value of a home in order to make an informed decision on whether or not they should lend on a property via a mortgage.

Thankfully, from reading this article, you now understand that you can use the MLS, or free real estate websites (like Zillow.com or Redfin.com above) to get an accurate value estimate without having to pay an appraiser.

Why Do I Want To Find Real Estate Comps For My House?

First off, you may want to find real estate comps to determine your house market value in order to sell your house on the market for the best price possible. By finding real estate comps and getting comparables for your subject property, you will be able to determine how much it is worth on the current market today.

This is powerful because if someone gives you an offer on your property, you will be able to know if it is a good offer or not! No more guessing and crossing your fingers while hoping you have a good offer for your property!

Secondly, you can use real estate comps to find the FUTURE house market value of your property.

What To Consider When Finding Real Estate Comps

There are several different factors you should consider when pulling real estate comps. The main factors you should look at are the number of bedrooms, bathrooms, square footage, and lot size. However, that doesn't always tell the full story.

So, if you want to be as accurate as possible, you should also examine other factors that may impact home values which may differ from property to property. 

For instance, how old is your home compared to the others, and what is the condition? You could have two homes on the same block that are roughly the same size and have the same number of bedrooms. But if one was built in 2010 and the other was built in 1970, the home prices would differ, especially if the latter is in worse condition.

Also, consider any additional features or upgrades that may make certain properties more or less desirable. For instance, if your home has a pool or an open-concept kitchen and the others don't, the value may be slightly higher than the others, even if they're roughly the same size.

Location is another critical factor that may impact the ultimate value. A home in New York will be worth far more than a similar home in Ohio. But the location also plays an essential factor even in the local market.

For instance, if one of the homes is in a different school district, it may affect the price. Or if the walkability of a particular neighborhood is better and it's close to shopping and local attractions, that could also impact the value.

Finally, also take into consideration the local housing market conditions. For instance, if it's a strong seller's market with a high demand for housing, your home may be worth slightly more now than it did six months ago.

Or if a particular neighborhood is especially desirable in the local market, it could drive up the price. That's why it's best to look for comps that sold recently and are as close to your home as possible geographically.

Why Would I Want To Determine The Future Value Of My Home?

Great question! You want to determine the future value of your home for a couple of reasons. Let’s say you want to renovate your kitchen & bathrooms to sell your home at a higher price. Well, how do we get the home estimate of what your home will be in the future? By using real estate comps. You actually look at the renovated comparable properties in your area to determine what the future value will be! 

If you ever wonder, "What adds value to my house?" Then, you can look at the renovated comparable properties around your house to see what the value-adds they have and the prices they sold at. From this little experiment, you are able to deduce which renovations can add value for the future price of your home/subject property.

For Real Estate Professionals (especially investors), the future value of a property once it has been renovated is usually called the “ARV.” ARV stands for “After-Repair-Value,” “After-Renovated-Value,” “After-Remodeled-Value,” or “After-Rehabbed-Value.” Once again, Real Estate Professionals use all of these words & phrases interchangeably!

Before we show you the Real Estate Skills Way for finding comps, let us make it absolutely clear that you DO NOT need a Realtor / Real Estate Agent to find real estate comps for you.

How To Run Comps On MLS

The best way to find comps is to run a search on the MLS. However, the database isn't open to the public. So, if you're listing the property as an FSBO, you may have to rely on Zillow and public records. But it's a fairly simple process if you're using an agent or somehow gain access to the MLS on your own.

The database should allow you to search for specific property types, including single-family homes, ownership types, school districts, etc. You can also narrow your search by inputting the number of bedrooms, bathrooms, square footage, and so on. Make sure to also look for closed or active sales.

Then you should be able to generate a map showing you all the nearby homes that have recently sold. Then, you can then use a tool to select the comps closest to your property and generate a report containing all the necessary data you need to determine a rough estimate of your home's value.

How To Look Up Real Estate Comps?

Use The Real Estate Skills Comp Criteria:

• Half Mile Radius from Subject Property
• Previous 6-Month Sales to Current Day Sales
• +/-20% of the Square Footage of the Subject Property
• Same Bed/Bath count, or as similar to the Subject Property as possible

Let us show you an example of using the Real Estate Skills Comp Criteria for finding comps and determining the future value (ARV). This example will help you tremendously if you are a Real Estate Wholesaler, Fix & Flipper, or Homeowner who wants to add value to their home to sell it at a higher listing price in the future.

Let’s say your subject property you are analyzing is a 3 bed / 2 bath 1,200 sq. ft. property and you want to find the ARV (After-Repair-Value) to determine its future value. 

Go into your MLS system, or use one of the free public real estate websites listed above, and look up the search criteria/function. From there, type in the address of your subject property and pull up a half-mile radius around the property.

Then, in the search criteria, modify the search so that you are only looking for SOLD properties within the past 6 months. We do not want to initially be looking at comparable properties that have sold outside of 6 months. This means if today is July 1st, 2018, we would only want to look at SOLD properties from January 1st, 2018 to July 1st, 2018.

In the search criteria, make sure the initial square footage you are looking for comparable properties is within +/-20% of the subject property. In this example, the subject property is 1,200 sq. ft. - this means you would only look for properties that have SOLD in the past 6 months between 1,000 sq. ft. & 1,400 sq.ft.

Additionally, you do not want to use comparables that have a different bed and bath count than your subject property. Since your subject property has 3 beds and 2 baths, you want to find comparable properties that are also 3 beds / 2 baths.

From there, you will now begin to see all of the "comparable" properties within a .5-mile radius around your subject property!

Now you use the comparable properties that have been renovated to current market trends to determine the future sales price of the home for your subject property for when it is renovated!

For example, from using the Real Estate Skills Comp Criteria, let's say you find a 1,112 sq. ft. 3 bed / 2 bath renovated home that sold at $390,000 two months ago on the same street as your subject property. And then, you also find a 1,300 sq. ft. 3 bed / 2 bath home that sold at $410,000 1 month ago on the same street as your subject property.

Now what you can do is take the average of those 2 comparable home sales and determine that your ARV will be right around $400,000 for your subject property once it has been renovated, given is the 1,200 sq. ft. 3 bed / 2 bath property used in the example!

And, there you have it! It is not much more complicated than that. What makes a true real estate professional who is great at using comps to determine a house value is someone who continually practices finding comps. You will get better and much quicker at analyzing property using this method over time. Once you have this skill honed, you will be able to quickly & accurately analyze the property for your company and clients.

We've been asked a lot to make a handout with the Real Estate Skills Comp Criteria, so we made it into a PDF just for you. Now you will always remember how to find real estate house comps in your area!  You can download the Real Estate Skills Comp Criteria Cheatsheet for free here.

(The image above shows the search functionality and capabilities of MLS Services. The image shows the SOLD comparable properties within a .5 mile radius of the subject property.)

A common question that comes up when finding real estate comps is:

What To Do If There Are No Comparable Properties?

Here's what to do in this scenario:

• Expand the half-mile radius property search a little wider to .75 mile radius
• Expand from looking for properties within the past 6 months to 9 months
• Expand from looking for properties within +/-20% of the square footage of the subject property to +/-25 to 30% of the square footage of the subject property
• Expand from looking within the same Bed/Bath count to more/less Beds & more/less Baths

Keep in mind that the less "comparable" a property is to your subject property in terms of square footage, location, bed/bath count, and features; the less it should be used as a completely accurate representation of the future value of your subject property!

A lot of real estate professionals wonder "How Do I Get Better At Finding Comps?" Our answer is that nothing replaces actually DOING THE WORK. You get better at finding accurate comps the more you use this method of finding comps. Over time, you will get a better eye for seeing why properties sell at certain prices and where your subject property will sell at!

Be sure to review the section above constantly for finding comps. The Real Estate Comp Criteria is the method that we & our clients and students use to accurately analyze the property to determine its current or future value.

So, maybe you've heard about real estate appraisers or realtors finding comps and have some questions about this, as well. Before we wrap up, let's get those questions answered!

Final Thoughts

There you have it! At Real Estate Skills, we commend you for reading the full article on Real Estate Comps: The (ULTIMATE) Guide.

You now know that you can find real estate comps for the current value, or future value, of a property for free!

The Real Estate Skills Comp Criteria listed above have been used to analyze property effectively for real estate investors, professionals, home buyers, & home sellers for years. We recommend you use the Real Estate Skills Comp Criteria for finding your real estate comps!

In fact, we made a PDF handout of the Real Estate Skills Comp Criteria so you can print it out, review it with your team, and keep it handy so you never forget it!

Click right here to download the Real Estate Skills Comp Criteria Cheatsheet!

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Cheers To Your Success In Real Estate!