Running accurate property comparables (comps) is essential for successful house flipping and making profitable investment decisions.
Step-by-Step Guide to Running Property Comps
Start by identifying recently sold properties within a 1-mile radius of your target property that have sold within the last 3-6 months.
Key Factors to Compare:
- Square footage (within 20% of your target property)
- Number of bedrooms and bathrooms
- Lot size
- Year built
- Property condition
- Location quality
- School district
Recommended Tools for Running Comps:
- MLS (Multiple Listing Service) – accessible through a real estate agent
- Zillow.com
- Redfin.com
- Realtor.com
- Property tax records
Adjustments to Consider:
Feature | Typical Value Adjustment |
---|---|
Bedroom | $5,000 – $10,000 |
Bathroom | $3,000 – $5,000 |
Garage Space | $5,000 per car |
Square Footage | $30-$50 per sq ft |
Pro Tips for Accurate Comps:
Use at least 3-5 comparable properties to establish a reliable price range.
Focus on properties that have sold, not just those currently listed for sale.
Account for seasonal market variations when analyzing sales data.
Consider consulting a local real estate agent for access to more detailed MLS data and market insights.
Common Mistakes to Avoid:
- Comparing properties in different school districts
- Not accounting for major improvements or upgrades
- Using outdated sales data
- Ignoring nearby foreclosures or distressed sales
Additional Resources:
- National Association of Realtors: www.nar.realtor
- Local Real Estate Investor Associations
- County property appraiser websites
Document all your research and keep detailed records of comparable properties for future reference and project planning.
Remember to factor in renovation costs and market trends when using comps to determine your maximum purchase price.
Contact your local real estate investment association for networking opportunities and access to experienced investors who can help verify your comp analysis.
Additional Considerations for Property Comps
Market Timing Impact:
- Seasonal buying patterns
- Local economic conditions
- Interest rate environment
- Development projects in the area
Neighborhood Analysis:
Evaluate upcoming changes that could impact property values:
- Planned infrastructure improvements
- New commercial developments
- Zoning changes
- School district modifications
Documentation Requirements:
Create detailed comp reports including:
- Property photographs
- Sale date and price
- Days on market
- Specific property features
- Condition notes
Conclusion
Accurate property comps are fundamental to successful real estate investing. Regular practice and attention to detail will improve your comp analysis skills over time. Stay current with market trends and maintain relationships with local real estate professionals to ensure access to the most reliable data.
Final Checklist:
- Verify all data sources are current
- Double-check adjustment calculations
- Review findings with experienced investors
- Update comp analysis every 30-60 days
- Keep detailed records for future reference
FAQs
- What exactly are property comps and why are they important for house flipping?
Property comps (comparables) are recently sold properties in the same area with similar characteristics used to determine a property’s fair market value. They’re crucial for house flipping because they help establish accurate purchase prices and potential resale values. - How recent should property comps be to be considered reliable?
Property comps should ideally be from the last 3-6 months. In rapidly changing markets, staying within 3 months is preferable. During stable market conditions, comps up to 12 months old may be acceptable. - What are the key features to compare when running property comps?
Compare square footage (within 20% of subject property), number of bedrooms and bathrooms, lot size, property age, construction quality, architectural style, and location (preferably within 1 mile radius in suburban areas). - How many comparable properties should I analyze for accurate results?
Analyze at least 3-5 comparable properties for a reliable assessment. In active markets with many sales, using 5-7 comps can provide more accurate results. - What online tools are most reliable for running property comps?
Professional tools include MLS (through a realtor), PropStream, RealQuest, and CoreLogic. Free alternatives include Zillow, Redfin, and local county assessor websites, though these should be cross-referenced for accuracy. - How do I adjust comp values for property differences?
Make dollar adjustments for differences in square footage ($25-50 per sq ft), bedrooms ($5,000-15,000), bathrooms ($3,000-8,000), garage spaces ($5,000-7,000), and lot size (varies by market). - What common mistakes should I avoid when running comps?
Avoid using foreclosures/distressed sales as comps, comparing properties across different school districts or neighborhoods, ignoring major differences in property condition, and relying solely on automated valuation models. - How do I account for market conditions when analyzing comps?
Apply market condition adjustments (time adjustments) of typically 0.5-1% per month in appreciating markets. Consider seasonal variations and current market trends in your specific area. - What role do pending sales play in property comps?
Pending sales can indicate current market trends but should be used as secondary data since final sale prices aren’t available. They’re most useful in rapidly changing markets to gauge current demand. - How do I verify the accuracy of my property comp analysis?
Cross-reference findings with local real estate agents, verify data through multiple sources, review actual property photos, and drive by the comp properties when possible to confirm condition and neighborhood characteristics.