If you're getting a property appraised, whether to settle an estate, prepare for a sale, or support a purchase, you'll almost certainly hear the word "comps." Short for comparable sales, comps are the backbone of the sales comparison approach, one of three methods appraisers use to estimate value.
The idea is one most people already understand: to know what a property is worth, look at what buyers recently paid for similar properties nearby. Here's how appraisers turn that simple idea into a supported value.
How the sales comparison approach works
If you're getting a property appraised, whether to settle an estate, prepare for a sale, or support a purchase, you'll almost certainly hear the word "comps." Short for comparable sales, comps are the backbone of the sales comparison approach, one of three methods appraisers use to estimate value.
The appraiser starts by finding recent sales of properties similar to yours: same general type, similar size, and ideally in the same market area. No two properties are identical, so the next step is adjusting each comp for its differences. If a comparable building sold for $1.2 million but has 2,000 more square feet than yours, its price gets adjusted downward. If your property has a newer roof or a better corner location, that works in your favor.
When comps carry the most weight
The sales comparison approach works best for properties that sell often enough to produce good data: small retail buildings, owner-occupied office space, vacant land, and small warehouses. It's less reliable for unusual properties with few true comparables, like a church, a marina, or a specialized manufacturing plant. It also gets harder in slow markets, where few sales have closed recently.