Comparable Sale
A recently sold property that is similar to the subject property in terms of location, size, condition, and features, used as evidence to support the appraiser's opinion of value in the sales comparison approach.
Selecting appropriate comparable sales is one of the most critical skills in appraisal. Ideally, comps should be located in the same neighborhood, sold within the past six months (twelve months is generally acceptable), and be similar in property type, style, size, age, and condition. When perfect comparables are unavailable, the appraiser must expand the search area or time frame and make larger adjustments. GSE guidelines (Fannie Mae, Freddie Mac) typically require a minimum of three closed comparable sales. Active listings and pending sales may also be used as supporting data but cannot replace closed sales.
Related Terms
Sales Comparison Approach
A valuation method that estimates a property's value by comparing it to similar properties that have recently sold in the same market area.
Adjustment
A dollar or percentage modification applied to a comparable sale's price to account for differences between the comparable and the subject property.
Paired Sales Analysis
A technique used to estimate the value contribution of a specific property feature by comparing two sales that are identical except for that one feature.
Bracketing
The practice of selecting comparable sales that are both superior and inferior to the subject property in key features, so that the subject's indicated value falls within the range of adjusted comparable values..
Market Conditions
The current state of supply and demand in the real estate market for a particular property type in a defined area.
More in Valuation Approaches
View allCost Approach
A valuation method that estimates value by calculating the cost to reproduce or replace the improvements, subtracting accrued depreciation, and adding the land value.
Income Approach
A valuation method that estimates a property's value based on the income it generates or is expected to generate.
Market Value
The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus..
Reconciliation
The process by which an appraiser evaluates and weighs the results from the different valuation approaches (sales comparison, cost, and income) to arrive at a final opinion of value..