Comparables (or “comps”) is a real estate appraisal term that refers to properties with characteristics similar to a subject property whose value is being determined.
If you are purchasing a home or using your home as collateral for a loan, your lender will ask a licensed or certified appraiser to determine the current market value of the property. The appraiser will rely on prices paid for recently sold homes in the area that are comparable in size, style, condition, quality, age, and other characteristics. Comparable sales are a critical part of determining the current value of a property.
Generally, the appraiser will narrow the number of comparables used in their report to three similar properties. Ideally, the appraiser will use comparable sales from the past 30 days, but they may extend that time frame if not enough comparables can be found.
Appraisers are objective participants in the real estate transaction. Their services are used by lenders to provide an impartial estimate of the true market value of a home.