What Is a Comp Analysis (CMA)?
A comparative market analysis evaluates a subject property by comparing it to similar properties (comparables or comps) that recently sold in the same area. The process involves finding relevant comps, adjusting for differences between each comp and the subject property, and arriving at an estimated market value.
For investors, comp analysis serves two purposes: estimating the after-repair value (ARV) of a property they plan to renovate, and confirming that the current asking price or offer price is reasonable relative to the market.
How to Find Good Comparables
A good comparable property meets these criteria:
Data sources for comps include the MLS (most comprehensive), county recorder and assessor websites (public records), real estate portals (Zillow, Redfin, Realtor.com), and specialized investor tools that aggregate data from multiple sources.
- Sold within the last 3-6 months (more recent is better)
- Located within 0.5-1 mile of the subject property (same neighborhood ideal)
- Similar in size: within 200 square feet or 20% of the subject
- Same property type (single-family, condo, townhouse, multi-family)
- Similar bed/bath count (within one bedroom and one bathroom)
- Comparable lot size (within 20% for residential)
- Similar condition or renovation level to your target finish
How to Adjust Comps
Since no two properties are identical, each comp must be adjusted to reflect what it would have sold for if it were identical to the subject property. Adjustments are always applied to the comp's sale price, not the subject property.
If the comp is better than the subject in some way, you subtract from the comp's price. If the comp is worse, you add to the comp's price. The logic is: "What would this comp have sold for if it were exactly like my property?"
- Square footage: $20-50 per sq ft (market dependent)
- Bedroom count: $3,000-10,000 per bedroom
- Bathroom count: $5,000-15,000 per bathroom
- Garage: $5,000-20,000 for presence/absence or size difference
- Pool: $10,000-30,000 depending on market
- Condition/renovation quality: 5-15% of sale price
- Location (busy street, view, flood zone): 5-20% adjustment
- Age of sale: 0.5-1% per month for sales older than 3 months
Calculating the Final Value
After adjusting all comps, calculate the average adjusted sale price. Many analysts use a weighted average, giving more weight to comps that required fewer adjustments (meaning they are more similar to the subject) and comps that sold more recently.
A common weighting approach is to rank comps by total gross adjustment percentage. A comp with only 5% total adjustments is more reliable than one with 25% total adjustments. Some investors also weight comps by proximity, with closer comps getting more weight.
Comp Analysis Example
Common Comp Analysis Mistakes
The most common mistakes in comp analysis are: using comps that are too far away geographically, using outdated sales (over 6 months old in a changing market), not adjusting for condition differences, using comps from a different price tier or neighborhood type, and ignoring market trends between the comp sale dates and today.
Another frequent error is confirmation bias: selecting comps that support the value you want rather than the value the data suggests. To avoid this, always pull all available comps first and then narrow down based on relevance criteria, not based on which prices look most favorable.
Automating Comp Analysis
Traditional comp analysis requires manually searching for recent sales, pulling data, calculating adjustments, and averaging results. This process typically takes 30-60 minutes per property. AI-powered tools like PropLab automate the entire workflow: finding comps, applying condition adjustments, and calculating the final value in about 60 seconds.
Automated comp analysis tools are particularly valuable for investors who analyze high volumes of deals, as they allow you to quickly screen properties and focus your detailed analysis on the deals that pass initial filters.
Key Takeaways
- A comp analysis compares your property to similar recently sold properties to estimate value
- Good comps are recent (3-6 months), nearby (0.5-1 mile), and similar in size and type
- Adjust comps for differences: add to the comp price if it is worse, subtract if it is better
- Weight your average toward comps that required fewer adjustments
- Avoid confirmation bias by pulling all available comps before filtering
Frequently Asked Questions
How many comps should I use in a CMA?
Use a minimum of three comps and ideally five or six. Fewer than three comps creates statistical unreliability. More than six is helpful when available but becomes impractical to adjust manually. The quality of comps matters more than quantity; three excellent comps are better than six mediocre ones.
What is the difference between a CMA and an appraisal?
A CMA is an informal market analysis typically done by agents or investors to estimate a property's value. An appraisal is a formal, regulated valuation performed by a licensed appraiser, usually required by lenders. Both use comparable sales, but appraisals follow strict standards (USPAP) and carry legal weight. The methodology is similar, but the rigor and documentation requirements differ.
Can I do a comp analysis without MLS access?
Yes. You can find recent sales through county assessor websites, Zillow, Redfin, Realtor.com, and PropLab. While the MLS has the most comprehensive and up-to-date data, public sources provide enough information for a solid comp analysis in most markets. PropLab aggregates data from multiple sources to provide comprehensive comp coverage without requiring MLS access.