Key Takeaways
- Follow the eight-step workflow: define, set parameters, pull, screen, verify, adjust, reconcile, document.
- Reconciliation weights comps by reliability, not by simple averaging.
- The most reliable comps are those requiring the fewest and smallest adjustments.
- Document every step to create a defensible, reusable analysis.
This lesson walks through the complete comp analysis workflow from defining the subject to documenting the final value conclusion. The worked example uses a 3BR/2BA single-family home with five comparable sales and a full adjustment grid, demonstrating every step in the process.
The Eight-Step Comp Analysis Workflow
Step 1: Define the Subject. Document the property's address, lot size, GLA, bedroom/bath count, year built, condition, features, and any unusual characteristics. Photograph the subject from multiple angles. Step 2: Set Parameters. Define your search criteria: geographic radius, time frame, size range, property type. Start tight and expand as needed. Step 3: Pull Candidates. Search MLS, county records, and investor platforms for all sales meeting your parameters. Cast a wide net—you will narrow down in the next step. Step 4: Screen Candidates. Evaluate each potential comp against the ideal criteria (location, condition, size, transaction type). Eliminate non-arm's-length transactions, outliers, and properties requiring excessive adjustments. Step 5: Verify Data. Cross-reference MLS prices against county deed records. Check for seller concessions, financing terms, and conditions of sale. Step 6: Adjust. Apply adjustments in the standard sequence using paired sales or market-supported values. Step 7: Reconcile. Weight adjusted values by comp quality and reliability. Step 8: Document. Record your analysis, assumptions, data sources, and conclusion.
Worked Example: 3BR/2BA Ranch in Suburban Market
Subject: 1,650 SF ranch, built 1998, good condition, 2-car garage, 0.25-acre lot. Recent upgrades include new kitchen (2023) and HVAC (2022). Located in Maplewood subdivision. Five comps identified within 0.8 miles and 8 months. After screening, all five are arm's-length conventional sales. Verification against county records confirms all MLS prices match deed records. No seller concessions disclosed.
| Comp 1 | Comp 2 | Comp 3 | Comp 4 | Comp 5 | |
|---|---|---|---|---|---|
| Sale Price | $335,000 | $348,000 | $320,000 | $355,000 | $340,000 |
| Sale Date | 3 mo ago | 2 mo ago | 8 mo ago | 1 mo ago | 5 mo ago |
| GLA (SF) | 1,700 | 1,580 | 1,620 | 1,750 | 1,640 |
| Bedrooms/Baths | 3/2 | 3/2 | 3/1.5 | 4/2.5 | 3/2 |
| Condition | Good | Good | Average | Excellent | Good |
| Garage | 2-car | 2-car | 1-car | 2-car | 2-car |
| Time Adj | +$1,675 | +$1,160 | +$6,400 | $0 | +$4,250 |
| Size Adj | -$2,000 | +$2,800 | +$1,200 | -$4,000 | +$400 |
| Condition Adj | $0 | $0 | +$12,000 | -$8,000 | $0 |
| Bath Adj | $0 | $0 | +$5,000 | -$3,000 | $0 |
| Garage Adj | $0 | $0 | +$12,000 | $0 | $0 |
| Adjusted Price | $334,675 | $351,960 | $356,600 | $340,000 | $344,650 |
Full comp adjustment grid for subject property
Reconciliation and Value Conclusion
Adjusted values range from $334,675 to $356,600 with a mean of $345,577 and median of $344,650. Comp 1 and Comp 5 are the most similar to the subject (same bed/bath, condition, and garage), requiring the least total adjustment. Comp 3 required the most adjustment ($36,600 gross, 11.4% of sale price—within limits but less reliable). Weighting the most reliable comps more heavily: (Comp 1 × 25%) + (Comp 2 × 20%) + (Comp 3 × 10%) + (Comp 4 × 15%) + (Comp 5 × 30%) = $342,920. Indicated value: $343,000 (rounded). This is the basis for your maximum offer price, subject to income analysis if the property is a rental and condition verification through inspection.
Guided Practice: Applying Reconciliation Weights
You have four adjusted comps: $295K (good match, low adjustments), $310K (decent match, moderate adjustments), $280K (weak match, high adjustments), $302K (good match, low adjustments).
- 1Assign weights based on comp quality: Comp A (35%), Comp D (30%), Comp B (25%), Comp C (10%).
- 2Calculate: ($295K × 0.35) + ($310K × 0.25) + ($280K × 0.10) + ($302K × 0.30) = $299,850.
- 3Round to $300,000 as indicated value.
- 4Note that the high-adjustment comp ($280K) received minimal weight and did not drag the value down disproportionately.
- 5If you had simply averaged, the result would be $296,750—understating value because the weakest comp had equal influence.
Key Takeaways
- ✓Follow the eight-step workflow: define, set parameters, pull, screen, verify, adjust, reconcile, document.
- ✓Reconciliation weights comps by reliability, not by simple averaging.
- ✓The most reliable comps are those requiring the fewest and smallest adjustments.
- ✓Document every step to create a defensible, reusable analysis.
Sources
- Appraisal Institute — Sales Comparison Methods(2025-03-15)
- Fannie Mae — Appraisal Guidelines(2025-03-15)
Common Mistakes to Avoid
Selecting comparable properties based on price proximity to a desired value rather than true similarity.
Consequence: Circular reasoning confirms a predetermined conclusion instead of independently estimating market value.
Correction: Select comps based on physical and locational similarity, not on how close their prices are to your target.
Failing to adjust for differences in transaction conditions between comparable sales.
Consequence: Non-arm's-length sales, seller concessions, and financing terms can distort the comp set by 5-15%.
Correction: Verify transaction type and terms for all comps and make appropriate adjustments.
Test Your Knowledge
1.In Step-by-Step Comp Analysis Workflow, what determines the reliability of a comparable sale?
2.What is the maximum recommended net adjustment for a single comparable sale?
3.How should the final value be determined from multiple adjusted comparable sales?