Step 4: Run Comps

Step 4.1 — What a comp actually is

A comparable sale is a recent, nearby sale of a house similar enough to yours that a buyer, an appraiser, or a lender would treat it as evidence of value. Recent usually means the last six months, nearby usually means the same neighborhood or within about a mile in a city and wider in rural areas, and similar means close in beds, baths, square footage, lot, age, and condition. Sold prices are evidence. Asking prices are opinions. Build your ARV from sold evidence and use active listings only to understand competition, never as the value itself.

Step 4.2 — Pull the set, then throw most of it out

Start wide — every sale in the window — then filter hard. Remove sales that are not arm's-length, houses that are clearly a different product (a new build next to 1950s ranches), and anything across a barrier buyers care about: a freeway, a school boundary, a flood zone edge. What survives, ideally three to five sales, is your working set. If nothing survives, widen the distance or the window one step at a time and note that you did — a thinner comp set means a more conservative ARV, not a more optimistic one.

Step 4.3 — Adjust like an appraiser, think like a buyer

No two houses match exactly, so adjust the comps toward the subject: value differences for beds, baths, square footage, garage, lot, and condition. Keep adjustments modest and consistent, and lean hardest on the comp that needed the fewest. Condition is the adjustment beginners botch most: compare your house as it will be after rehab to comps in that same finished condition, and do not let a renovated comp justify a renovated value for a house you plan to sell tired. When comps disagree, weight the closest and most recent, and write down why.

Step 4.4 — Land on one number — and a range

Produce an ARV point estimate for the math in Step 5, plus a low–high range that reflects how solid the evidence is. A tight range in a tract neighborhood with ten clean sales supports an aggressive offer. A wide range in a mixed rural area demands caution. Show your work when you present an offer or send a deal to buyers: the comp addresses, sale dates, and prices. Buyers and sellers both trust numbers they can inspect, and the discipline of showing work keeps your own estimates honest.

Step 4.5 — Know when the comps say 'pass'

Sometimes the honest answer from the comp set is that the deal cannot work at any price the seller will accept: values are too low for the rehab the house needs, or the only sales are too old and too far to support any value at all. That is information, not failure. A pass made in twenty minutes at a desk costs nothing. The same lesson learned after a contract, inspections, and marketing costs weeks and reputation. Let the comps kill bad deals early and often — that is most of what they are for.

Do this step now

Do not just read this step — work it. Open the 70% Rule Calculator and run one real or practice property through it, then read the full guide for this step: How to Run Comps. Write down what you produced — a number, a list, a decision — in a deal file you will keep. Every later step assumes that artifact exists. If a term on this page is new to you, the glossary defines it with a worked example, and the topic hubs gather everything on the subject in one place. Progress in this business is mostly finished paperwork and honest numbers, repeated until they compound.

How you'll know this step is done

This step is done when you can point to the artifact it produced — a written decision, a worked number, a list, a signed paper, or a log entry — and explain, in plain language, how you got it and what would change it. If you can only say you read about it, the step is not done yet, and moving on anyway is how gaps hide until a live deal finds them at the worst price. It is also done when you know your own weak point inside it: the input you estimated instead of verified, the conversation you are avoiding, the deadline you have not calendared. Name that weak point in your deal file and give it a date. Steps in this path are not school subjects to pass once; they are stations you will revisit on every deal, faster each time, because the artifact from the last deal becomes the template for the next one.