Appraisal Basics
How Comparable Sales Affect Value
By Carlos E. Larocca, Certified Residential Appraiser (Cert Res RD6469)5 min read
Comparable sales are the backbone of residential valuation. Appraisers select recent, nearby, arm's-length sales of similar properties, adjust each for measurable differences, and reconcile the adjusted results, weighting the most similar sales most heavily rather than averaging them.
What makes a sale comparable
Proximity, recency, similarity in size and quality, and an arm's-length transaction. In condominiums, the same line in the same building outranks a physically similar unit across the street.
How adjustments are supported
Paired sales analysis isolates a single difference between two otherwise similar transactions to measure what the market paid for it. Where paired data is unavailable, cost, depreciation, and market participant interviews support the adjustment, and the reasoning is disclosed.
Why averaging comparables is wrong
An average treats a weak comparable as equal to a strong one. Reconciliation instead weights the sales requiring the fewest and smallest adjustments, which is why two appraisers using the same three sales can reach defensibly different conclusions.
Frequently asked questions
- How many comparable sales are used in an appraisal?
- Typically three to six closed sales, often supplemented by active listings and pending contracts to show current market direction.
- How recent do comparable sales need to be?
- Preferably within three to six months. Older sales can be used with a market conditions adjustment when recent data is unavailable.