Are you a realtor wondering how to choose the most accurate comps that will truly support your listing price and protect your clients’ interests?
Here is exactly what every realtor needs to know that can make the difference between a listing that sits on the market and one that sells quickly at the right price.
As a realtor, you know that choosing the wrong comps can lead to overpriced listings that sit on the market for months, frustrated sellers, and lost commissions.
If you’re like me and believe that accurate pricing is the foundation of successful real estate transactions, then you’ll want to understand how real estate appraisers select comparable sales that actually reflect market value.
With the insights I’m sharing today, you’ll be able to choose comps that support realistic pricing and give your clients confidence in their decisions.
This post is all about how realtors can choose comps that lead to successful transactions and satisfied clients.
Why Choosing Comps Is Different From Just Finding Recent Sales
As someone who’s been appraising homes in Philadelphia and suburbs since 2004, I’ve seen countless situations where well-meaning realtors chose comps that looked good on paper but didn’t truly reflect what buyers would pay.
What I’ve learned is that choosing comparable sales can feel overwhelming for realtors, but having the right methodology can make all the difference.
Here’s something that might surprise you: the most recent sale in your neighborhood isn’t automatically your best comparable.
When I’m appraising a property, I don’t start by looking at sale prices.
I start by understanding what a typical buyer would find appealing about the specific property I’m valuing.
Here is a situation that would keep most real estate agents up at night:
A realtor listed a beautiful custom home at $850,000 based on a recent sale down the street for $825,000.
The homes looked similar from the outside – same age, same square footage, same neighborhood.
But after 90 days with no offers, the frustrated sellers called me for an appraisal.
Here’s what the realtor missed:
The subject property was located on a busy road with constant traffic noise, while the recent sale backed up to peaceful woods.
The subject also had a standard builder-grade interior, while the “comparable” included custom millwork and high-end finishes throughout.
Most importantly, the “comparable” had a separate in-law suite, which was a highly sought-after amenity in this market area.
The actual market value? $760,000. The sellers had to reduce their price by $90,000 and start over with their marketing.
This is exactly why understanding what makes properties truly comparable is so crucial for your success.
Understanding What’s Really at Stake in Pricing Cases
When you choose the wrong comps, you’re not just affecting one transaction – you’re impacting your entire reputation and your clients’ financial future.
I’ve worked with realtors who’ve lost listings because their initial pricing was so far off that sellers lost confidence.
I’ve also seen situations where overpricing cost sellers tens of thousands of dollars because they missed the peak selling season.
But here’s what’s really at stake: your clients are making the biggest financial decision of their lives, often involving their most valuable asset.
When you choose comps that don’t truly reflect market reality, you’re setting them up for stress, disappointment, and potentially significant financial loss.
The good news?
Once you understand how to think like an appraiser when selecting comps, you’ll price properties more accurately and close more deals.
The Buyer’s Mindset: How Smart Comp Selection Protects Your Clients
Before you pull a single comparable sale, ask yourself this question: “If this house weren’t available, which house would my typical buyer consider to be a reasonable substitute?”
This is the principle of substitution, and it’s the foundation of how appraisers select comparables.
We focus on what matters most to the buyer, not what’s most convenient for us to find.
For a typical suburban family home, buyers might prioritize:
- School district quality
- Commute time to employment centers
- Neighborhood character
- Lot size and privacy
- Home condition and move-in readiness
For a unique property like a converted barn or historic home, buyers might focus on:
- Architectural character and uniqueness
- Privacy and acreage
- Proximity to amenities
- Zoning and legal use restrictions
Here’s what I wish more realtors knew about choosing comparable sales for for unique properties:
It’s perfectly ok to use older sales or properties from farther away. We’re looking for the most similar properties that would appeal to the same buyer pool.
Why Location Alone Doesn’t Make a Good Comparable
I recently appraised a property where the realtor was frustrated that I didn’t use the sale “right next door” as my primary comp. Here’s why:
The subject property was a meticulously maintained 1950s ranch with original hardwood floors, updated kitchen, and beautiful landscaping.
The next-door sale was also a 1950s ranch, but it was a complete fixer-upper that sold to an investor for cash.
The typical buyer for the subject property was looking for a move-in ready home in this specific school district.
The typical buyer for the next-door sale was looking for a renovation project with profit potential.
Same street, same age, same style—completely different buyer pools and market segments.
Instead, the best comp was located eight blocks away, which was also move-in ready, had similar updates, and appealed to the same type of buyer.
Even though it was farther away, it was a much better indicator of what buyers would pay for the subject property.
The Hidden Costs of Using Poor Comps
Let me break down what happens when you choose sales that don’t truly reflect your property’s market:
Overpricing consequences:
- Your house will sit on the market longer
- Carrying costs for sellers increase (mortgage, utilities, maintenance)
- Lost buyer interest as property becomes “stale”
- Potential for multiple price reductions damaging perceived value
Underpricing consequences:
- Immediate financial loss for sellers
- Sellers questioning your market knowledge
- Lost commission on higher sale price
Our Approach to Finding Comps
After many years in this business, I’ve learned that the best comparable sales aren’t always the most obvious ones.
We specialize in unique and challenging properties because we’ve developed a systematic approach to finding truly comparable sales.
Here’s our process:
Step 1: Understand the buyer’s motivation
We always start by asking: “Why would someone buy this specific property?” The answer guides our entire search strategy.
Step 2: Identify the key attributes that drive value
This might include school districts, architectural style, lot characteristics, proximity to amenities, or unique features that appeal to specific buyer segments.
Step 3: Expand our search parameters strategically
We’d rather use a six-month-old sale from a competing neighborhood than a recent sale that appeals to a different buyer pool.
Step 4: Verify market conditions
We analyze whether market conditions have changed since older sales closed and adjust accordingly.
This approach has allowed us to successfully appraise everything from converted barns to properties with equestrian amenities to homes with historical significance.
Red Flags That Should Prompt You to Reconsider Your Comps
Here are the warning signs that your sales might not be truly comparable:
• Sale was under duress (divorce, foreclosure, estate sale with time pressure)
• Significant condition differences that would appeal to different buyer types
• Different buyer motivations (investor purchase vs. owner-occupant)
• Unusual financing terms that affected the sale price
• Major location differences (busy road vs. quiet street, different school districts)
• Seasonal timing issues that might have affected demand
• Property had been on market for extended period before selling
• Multiple price reductions before final sale
• Cash sale significantly below market for quick closing
• Sale included personal property or other non-real estate items
If any of these red flags apply to your comparable sales, you need to either find better comps or make significant adjustments to account for these differences.
How Realtors Can Work Effectively with Appraisers
Here’s what I wish more realtors knew about working with appraisers when it comes to comparable sales:
Before the appraisal:
- Share your CMA and explain your reasoning for the list price
- Provide information about any unique features or recent improvements
- Let us know about any comparable sales you think we should consider
- Explain any market conditions that might affect value
During the appraisal process:
- Be available to answer questions about the property and neighborhood
- Provide access to any areas that showcase the property’s best features
- Share information about buyer feedback you’ve received
After the appraisal:
- If you disagree with our value, provide specific comparable sales with detailed explanations
- Focus on properties that truly compete for the same buyers
- Understand that we might use older or more distant sales if they’re more similar
Remember, we’re on the same team. We both want accurate valuations that reflect true market value.
7 Secret Ways Appraiser Consulting Can Empower You
Strategic Use of Comparable Sales in Different Market Conditions
The way you select and use comparable sales should adapt to current market conditions:
In a seller’s market:
- Focus on the most recent sales to capture rapid appreciation
- Look for properties that sold quickly with multiple offers
- Consider pending sales and active listings to gauge current demand
- Be cautious about using older sales without market condition adjustments
In a buyer’s market:
- Use the most recent sales to reflect current pricing reality
- Look for properties that actually sold, not just those that were listed
- Consider price reductions and time on market in your analysis
- Focus on move-in ready properties if that’s what buyers are demanding
In a balanced market:
- Use a mix of recent sales spanning 3-6 months
- Consider seasonal factors that might affect demand
- Look for consistent pricing patterns across similar properties
What Your Clients Need to Know About Comparable Sales
Here’s how to explain comparable sales in a way that reassures rather than worries your clients:
For sellers: “I’ve selected the most relevant sales that show what buyers are actually willing to pay for homes like yours.”
For buyers: “These comparable sales show what other buyers have paid for similar homes, which helps ensure you’re making a competitive offer without overpaying.”
Key points to emphasize:
- Comparable sales are about finding properties that appeal to the same buyer pool
- Recent sales are preferred, but the most similar sales are most important
- Market conditions can affect how we interpret older sales
Working Together for Better Outcomes
The best outcomes happen when realtors and appraisers work as a team to understand what truly drives value for each specific property.
When we take the time to understand buyer motivation and select comparable sales that reflect true market competition, we’re setting the stage for a successful transaction.
The properties that sell quickly and smoothly are almost always the ones where the realtor took time to understand what makes that specific property appealing and found comparable sales that reflected that same appeal.
Moving Forward with Confidence in Comparable Sales Selection
The next time you’re preparing a CMA or pricing a listing, remember that the goal is to find the most relevant sales.
When you approach comparable sales selection this way, you’ll price properties more accurately, have fewer surprises during the appraisal process, and build a reputation as a realtor who truly understands market value.
Ready to discuss how better comparable sales selection can strengthen your listings and protect your clients? I’m always happy to chat about specific situations and share insights from my experience appraising unique and challenging properties throughout the Philadelphia area. Contact Me Here.
This post is all about how realtors can choose comps that lead to successful transactions and satisfied clients.
