How To Choose The Best Comps | An Appraisers Guide

• Knowing how to choose the best comps is essential for appraisers to reflect what buyers are willing to pay for similar homes. This is the basis for determining a home’s fair market value.
• Closed sales make the best comps because they show actual sale prices, not just the asking price.
• Comps that bracket features (one superior and one inferior) helps with accuracy by showing which homes that are a bit better and a bit worse to show how certain features affect value.
• Adjusting for market trends is important, especially in changing markets.
• If good comps are hard to find, appraisers can expand the search area,  use older sales with adjustments, or find other creative ways to estimate value.
• Local market knowledge is important. The appraiser should be familiar with the area and  understand buyer preferences.
• There’s no perfect formula. Appraisers rely on both data and experience to determine the most accurate value.

Appraisers, real estate agents, and homeowners alike can benefit from knowing how to choose the best comps to help determine a home’s market value.

All it takes is knowledge of the local market and a basic understanding of what buyers in a certain area might seek as alternative options. 

Learning the “art” of how to choose the best comps will lead you to a more accurate and credible value estimate.

“Comps”, or comparables, are recently sold properties that are similar to the subject property in features like location, size, condition rating, and amenities.

Real estate comps provide a basis for appraisers in analyzing housing market data to determine a home’s value. 

Choosing the best comps for a particular property doesn’t just matter to working appraisers, but also should matter to sellers, lenders, and anyone in the home buying process.  

Comp selection will ultimately set an upper and lower baseline for the appraised value. This data demonstrates what buyers are actually willing to pay for homes in a certain area. 

This important data will guide pricing strategies for agents, lenders, and tax assessments.  

Ultimately, selecting the wrong comps just plain leads to inaccurate values, which will negatively affect all parties involved. 

(not to mention the appraiser’s credibility)

Appraisers follow a structured approach to selecting comps, weighing certain factors to make sure they end up with the most well supported numbers. 

These provide a historical snapshot of the market and are the foundation of valuation.

Closed sales (preferably within 90 days) are considered the best indicators of what’s happening most recently in the market. 

Older sales are often included, as well, but should be adjusted to reflect any changes in the market. 

Pending and active listings can also help appraisers and agents to spot changing trends. 

Appraisers will often contact listing agents to get additional info on what’s happening with a particular sale in terms of offers or activity.

Comps should reflect where buyers would reasonably search for alternatives. If there ARE sales within the neighborhood, those should always be considered first. 

Appraisers must have a valid reason (and a darn good explanation IN the report) for using comps outside the neighborhood when there is data to use. 

I can’t tell you how many times an agent has met me at the home with a handful of “high value” comps to consider… all being located in other neighborhoods, with no explanation at all of why the sales in the same neighborhood wouldn’t be a better indication.

This is not generally helpful to the appraiser.

A good appraiser doesn’t search for comps based on price – they search for the most similar properties and then analyze where the final price landed and why. 

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Market conditions can change rapidly, so when using older comps, adjustments may be necessary to reflect price shifts.

If your best comp closed six months ago and home prices have risen by 4% during that time, the sale price should be adjusted accordingly to provide an accurate comparison.

Understanding market trends is essential—without it, you won’t know whether prices are increasing, stabilizing, or declining. 

Relying solely on national housing data can be misleading, as broader trends may not reflect the reality of a specific neighborhood or market segment. This is why local market knowledge is critical in ensuring accurate adjustments and valuations.

Key property features—such as size, condition, updates, and amenities like decks, pools, or fireplaces—play an important role in selecting comparables.

The closer a comp matches the subject property in these aspects, the more reliable it will be as an indicator of value.

When an exact match isn’t available, appraisers use a bracketing approach. This means selecting comps that represent a range of features—some superior, some inferior—to illustrate how the market responds to each characteristic. 

This method helps ensure a well-supported and market-driven valuation that’s easy to understand from the data shown. 

Bracketing is a technique appraisers use to compare the property they’re appraising to others that are slightly superior and slightly inferior in specific features. 

This approach helps establish support for the value, based on actual market activity. 

For example, if a home has a larger lot than most of the comparable sales, the appraiser will analyze and consider properties with both smaller and larger lots to determine where it fits in the market. 

Lenders like to see bracketing of most features (including price), as this helps create a more reliable appraisal report.

Bracketing can show how the market reacts to certain features or differences in things like size or condition.

• Lender Requirement: Many lenders ask appraisers to use bracketing to make sure the value of a property is supported by the market.
• Well-Rounded Comparisons: By choosing properties that are both better and worse in certain ways, appraisers can show a range of values, which makes the final appraisal more reliable. Ideally, the value of the property in question should fall between the upper and lower range. 
• Support for Adjustments: Bracketing helps appraisers demonstrate how differences in features, like a bigger yard or newer kitchen, can affect the property’s value.
• Shows What Buyers Want: It helps prove what buyers are willing to pay for properties that vary in features, making the appraisal stronger.

In short, bracketing is a useful tool appraisers often use, especially when they can’t find a perfect match for a property.

(Which, by the way, is pretty rare in most cases.)

Bracketing can show the reader how the market values different property features. This helps back up their final value. 

Let’s say you’re appraising a house that has 2,200 square feet, but it’s hard to find a close match. To bracket square footage, you might choose comps that are a bit smaller and a bit larger, like one that’s 1900 square feet and another that’s 2,400 square feet. 

This gives you a good sense of how the market values both smaller and larger homes compared to the subject property. 

In a perfect world, this will also give you an indication of the lower end value range and the upper end range. 

You can adjust the price based on the differences in size and explain how much more or less buyers are willing to pay for those extra square feet.

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Now, let’s say the house you’re appraising has a 3 car garage. If the comps don’t have the same feature, you might include one with no garage, one with a two-car garage, and one with a four-car garage. 

By comparing these, you can see how the extra garage affects the value and use those examples to justify any adjustments to the value.

Appraisers analyze comps to determine value using the sales comparison approach. 

Steps typically include:

• Adjusting for differences in square footage, condition, and features.
• Weighing the most relevant comps more heavily.
• Looking at price trends in competitive neighborhoods.
• Using repeat sales to identify the rate of market appreciation or depreciation.

Closed sales represent final transactions, reflecting actual, verified market behavior, rather than asking prices or speculative values. 

While pending and active listings can offer insights into what the market is doing, they do not confirm what buyers will ultimately pay. 

Appraisers will almost always rely more heavily on closed sales, but consider other data as needed.

Selecting comps is both a science and an art. 

I’d say about 50/50. 

It takes time, familiarity with your market, and careful analysis. A well-chosen comp set should:

• Have at least 1-2 sales within the immediate area.
• Reflect the type of home buyers would consider as a substitute.
• Avoid outliers that could distort value conclusions.

One question I get often… 

When there are no relevant sales to be found at any time in the last year or beyond, it’s time to get a little more creative…

Older sales in the same neighborhood can be extremely useful if you know the rate of appreciation.  

Buyers will usually consider homes in similar areas. 

Ask yourself why certain buyers like a particular neighborhood and seek out other developments that fit the mold.

(no pun intended… who wants a moldy house?) 

Is it the same school district? 

Is there a large employer nearby that draws homebuyers to the area? 

Do all the homes in the neighborhood have similar or consistent features that attract a certain type of buyer? 

Is there a nearby development of similar aged homes that tend to bring sale prices in the same range? 

This can help you determine where to find the best alternatives.

Trust your own “buyers instinct”. 

If you’re familiar with your area, you should have an idea of what other neighborhoods a buyer might like if nothing is available in their first choice neighborhood.

The same theory applies to finding good comps. 

Understanding how prices move over time is must-have knowledge when working with older sales. 

If a comp is outdated, its relevance must be explained in the appraisal, along with any adjustments to reflect current market conditions.

In cases where no ideal comps exist—something every appraiser and agent encounters—it’s still possible to establish a reasonable value range. 

Even if the available sales data is outdated or differs significantly from the subject, it can provide a starting point.

By identifying what is likely too high or too low, appraisers can narrow down an appropriate range. 

Recognizing general trends and knowing where adjustments should typically fall allows for a well-supported valuation, even if the best conclusion is simply “somewhere in the middle.”

The real question is not how far can you go, but where should you go? 

Buyers typically shop within specific market areas, like within a certain school district, or an up-and-coming neighborhood that’s close to the same employment centers. 

Comps should reflect realistic alternatives. 

As long as there’s a good explanation for why Buyer Bob would also consider a home in a neighborhood 10 miles away, you could find a reliable comp there.

As an appraiser who works primarily for mortgage lenders, I find that most lenders prefer a good and reasonable explanation over a lousy comp that’s 5 miles away instead of 10. 

Although there is not a set “rule” on how close your comps MUST be, the “preferred” guideline is as follows:

• Rural properties: Often requires comps from miles away due to very limited sales. Comps in similar rural areas are your best bet. 
• Urban properties: Comps should be within just a few blocks, preferably 1/2 a mile.
• Suburban properties: Comps within the same development are best. If not available, use areas in the same school district or similar distance from shopping areas or large employers. Ideally, suburban comps should be within a 1-2 mile radius. 

With limited sales volume, recent comps are often scarce. Instead of strictly adhering to a 90-day window, appraisers may:

• Use older comps, then adjust for market changes as needed. Stable markets make this more reliable.
• Analyze a larger data set to determine trends over time rather than relying on one or two specific sales.
• Follow lender guidelines, such as the requirement for at least 3 comps within 12 months. Older or pending sales can then be added for support, and sometimes even relied upon more heavily if they are better than the first three. 
• As a general rule, active sales (not under contract) may be included to bracket a certain feature or to demonstrate what the market is doing. These are rarely if ever given weight in deciding value. 

Lenders typically require at least three closed sales that have sold within the past year to support an appraisal. 

However, appraisers often include additional comps—usually four to six total—to help bracket key property features, reinforce value conclusions, or illustrate broader market trends.

The most relevant comps are those that reflect recent sales in the subject’s immediate market area. While older sales can sometimes be used with proper adjustments, the closer a comp is in terms of time, location, and property characteristics, the stronger the appraisal will be.

As of March 2025, Fannie Mae has introduced new rules that require appraisers to adjust for market changes in a more detailed way. 

Appraisers now need to account for changes in property values, down to the month.

(By next update it might be down to the minute!)

This means that if home prices go up or down in a particular month, appraisers must reflect those changes and adjust comps accordingly. 

This paints a more accurate picture of the property’s value based on what’s happening currently and ultimately helps readers of the appraisal report understand how the value came to be.   

To understand market shifts, appraisers will analyze sales from different periods. 

Using MLS or other data sources, they compare:

Recent sales from 2025 vs.2024, then 2024 vs. 2023 to see price patterns.

Competitive neighborhood trends in a more specific area for confirmation of broader trends or to note inconsistencies.

Use Broader timelines or a grouping of similar neighborhoods when necessary to establish longer term trends.

A repeat sale is when a property is sold more than once over a short period of time, allowing appraisers to track how its value has changed. 

By comparing the price it sold for each time, appraisers can spot trends in the market, like whether home values are going up or down in a certain neighborhood. 

Although it’s true that one sale doesn’t “make a market”, repeat sales help appraisers better understand how the market is moving and can lend support to other data trends.

To analyze repeat sales:

• Use MLS search filters to identify resales.
• Compare past and current sale prices.
• Confirm the property is similar (in condition, size, etc) at the time of its prior sale, indicating that the time of sale is the primary difference.
• Recognize patterns rather than relying on single examples.

Not all sales can be used when figuring out a home’s value. Some sales don’t reflect the true market price and can mess up the appraisal.

Here’s a quick look at the types of sales appraisers will leave out:

Removing any bias and focusing on data results in a more accurate appraisal or pricing strategy.

• Is the market trending up, down, or staying flat?
• Are there seasonal changes affecting pricing?
• Do different property segments behave differently? 
• Discussing trends with fellow appraisers or real estate agents can help refine the analysis.

Every market is unique, and selecting comps isn’t a one-size-fits-all process.

Appraisers, agents, and anyone else searching for good comps must adapt their approach as conditions and preferences change.

Choosing the right comps is key to delivering an accurate real estate appraisal.

It’s a detailed process that involves careful analysis of different factors such as property features, market trends, and the timing of sales.

While appraisers rely on data to guide their decisions, they also need to adapt to the unique characteristics of each market.

By understanding how to select and adjust comps correctly, appraisers help ensure the value of a property reflects its true market worth, benefiting buyers, sellers, and lenders alike.