You find a house you love. The kitchen is updated, the photos look great, and the asking price seems reasonable.

But is the home actually worth what the seller is asking?

That question usually begins with real estate comps.

Comparable sales—commonly called comps—are recently sold properties that are sufficiently similar to the home you are evaluating. Buyers, sellers, real estate professionals and appraisers use them to understand what the local market has actually been willing to pay for similar homes.

The key word, however, is comparable.

A house that sold three streets away is not automatically a good comp. Neither is a house with the same number of bedrooms. Choosing the wrong properties can make an overpriced home look reasonable—or make a fairly priced home look expensive.

Here is how to do it properly.

What Are Comps in Real Estate?

A comparable sale is a property transaction used as evidence of what a similar property may be worth.

The concept is simple:

If buyers recently paid a certain amount for several genuinely similar homes in the same market, those transactions provide evidence for what another similar home may command.

Professional appraisal practice uses the same basic principle.

Fannie Mae’s comparable-sales guidance says comparable properties should have similar physical and legal characteristics, including factors such as site, room count, finished area, style and condition. It also emphasizes the subject property’s market area—the area in which buyers would realistically consider competing properties.

That is why simply searching:

“3 bedroom homes sold near me”

is not enough.

A useful comp analysis asks a much better question:

What homes would the same buyer reasonably have considered instead of this one?

How Many Real Estate Comps Do You Need?

For a quick buyer analysis, there is no magic number.

But three good closed sales are usually much more informative than ten loosely related properties.

There is also a useful professional benchmark: Fannie Mae requires a minimum of three closed comparable sales in the sales-comparison portion of an appraisal, although additional sales can be used when necessary.

That does not mean three automatically selected search results constitute a valuation.

The quality of those three matters more than merely reaching the number.

A strong comp set might contain:

  • three to six highly comparable closed sales
  • perhaps one or two active or pending listings for current competitive context
  • additional sales only when they help explain an unusual feature or market condition

Closed sales tell you what buyers actually paid.

Active listings mostly tell you what sellers hope to receive.

Those are very different pieces of information.

How Recent Should Real Estate Comps Be?

Start recent.

Then expand carefully if the property or market requires it.

Fannie Mae guidance says comparable sales that closed within the previous 12 months should generally be used, but it also makes an important point: the newest sale is not automatically the best comp.

A nine-month-old property requiring few adjustments can be more useful than a one-month-old sale that is substantially different from the subject.

For an ordinary suburban home in an active market, you would usually begin much tighter than 12 months.

Think:

same immediate market + recent + highly similar

before expanding outward.

But avoid arbitrary rules such as:

“Never use anything more than six months old.”

or:

“Never go farther than one mile.”

Real markets do not always cooperate with neat rules.

A unique rural property, luxury home, townhouse development or low-turnover subdivision may require looking farther away or further back in time.

The reason for expanding should be explainable.

How to Pull Real Estate Comps Yourself

Here is a practical way to do it.

Step 1: Define the Subject Property First

Before looking for any comps, write down what you’re actually comparing.

Capture at least:

  • property type
  • neighborhood or subdivision
  • detached vs. attached
  • approximate living area
  • bedrooms
  • bathrooms
  • lot characteristics
  • garage
  • basement
  • finished basement
  • age/year built
  • general condition
  • major renovations
  • school district where relevant
  • HOA/association type where relevant
  • unusual location factors

This prevents a common mistake: finding attractive sales first and then convincing yourself they’re comparable.

Step 2: Search the Closest Competitive Market

Start with the same subdivision or immediate neighborhood when possible.

Fannie Mae notes that sales within the same neighborhood are generally the best indicators because they tend to reflect the same positive and negative location influences.

But competing market areas can also be appropriate when those properties genuinely compete for the same buyers.

Do not automatically cross a major road, school boundary, municipality, development type or housing market just because the house is geographically close.

Two homes can be half a mile apart and belong to very different buyer markets.

Step 3: Use Closed Sales First

Suppose a house is listed for $475,000.

Nearby active listings are:

  • $489,000
  • $495,000
  • $510,000

That may make $475,000 appear inexpensive.

But imagine comparable homes actually closed recently around:

  • $442,000
  • $450,000
  • $455,000
  • $461,000

Suddenly the picture changes.

That is why asking prices alone are poor evidence of value.

Use closed sales as the primary valuation evidence.

Active and pending listings can still be useful because they show current competition and potentially changing market conditions.

Fannie Mae’s sales-comparison guidance similarly calls for consideration of closed sales, contract sales and current offerings when analyzing a market.

Step 4: Match the Property Type

Do not casually mix:

  • detached houses with townhomes
  • townhomes with condos
  • ranches with large two-story homes
  • fee-simple townhomes with materially different condo ownership
  • newer construction with substantially older housing
  • properties on unusually large lots with ordinary subdivision lots

A three-bedroom property is not comparable merely because another property also has three bedrooms.

Step 5: Compare Size—But Don’t Value the House by Multiplying Price Per Square Foot

Price per square foot is useful as a signal.

It is dangerous as a valuation formula.

One 2,000-square-foot home has:

  • a fully remodeled kitchen
  • finished basement
  • updated bathrooms
  • premium lot
  • two-car garage

Another 2,000-square-foot property has:

  • original kitchen
  • unfinished basement
  • dated bathrooms
  • inferior location

Treating them as interchangeable because both have 2,000 square feet misses much of what buyers actually pay for.

Professional comparable adjustments are supposed to reflect market reaction to differences rather than arbitrary adjustment formulas, as explained in Fannie Mae’s adjustment guidance.

Step 6: Compare Condition and Renovations Carefully

Look for differences such as:

  • renovated kitchen
  • quartz/granite counters
  • updated bathrooms
  • hardwood flooring
  • roof/HVAC/window updates
  • finished basement
  • additional bathroom
  • added living area
  • fireplace
  • premium/end-unit location
  • backing to open space
  • water or golf-course view
  • deferred maintenance

But don’t make up adjustment numbers.

For example:

“Updated kitchen = exactly +$25,000”

without local market evidence is not serious valuation analysis.

A $40,000 kitchen renovation does not necessarily add $40,000 of market value.

The question is:

What did buyers in this particular market appear willing to pay for that difference?

Step 7: Look at the Sale Date and Market Direction

A comparable sale is a snapshot from a particular point in time.

If prices have been moving materially since that home went under contract, an older sale may require context.

Fannie Mae requires appraisers to consider market changes between a comparable property’s contract date and the valuation date when determining whether a time adjustment is warranted. Those adjustments must be supported by evidence rather than assumption. See its adjustments-to-comparable-sales guidance.

For a buyer doing an informal analysis, the takeaway is simpler:

Don’t compare today’s asking price with an old sale without asking what the market has done since then.

Step 8: Look Beyond Bedrooms and Bathrooms

Consider these two properties:

Home A

  • 3 bed / 2.5 bath
  • 2,050 sq. ft.
  • unfinished basement
  • original kitchen
  • interior lot

Home B

  • 3 bed / 2.5 bath
  • 2,020 sq. ft.
  • finished basement
  • remodeled kitchen
  • premium cul-de-sac lot

A basic search engine might group them together beautifully.

A thoughtful buyer shouldn’t assume they’re economically identical.

Quick Comp Check

Good comp signals

  • ✓ Closed sale
  • ✓ Same property type
  • ✓ Same competitive market
  • ✓ Similar size/layout
  • ✓ Similar condition
  • ✓ Recent enough to reflect today’s market
  • ✓ Meaningful differences can be explained

Avoid

  • ✕ Cherry-picking sales
  • ✕ Relying only on price per square foot
  • ✕ Treating asking prices as sold values
  • ✕ Assuming the nearest house is automatically comparable
  • ✕ Trusting an AI-generated comp list without knowing its data source

A Simple Real Estate Comp Example

Subject property

  • List price: $475,000
  • Living area: approximately 2,100 sq. ft.
  • 3 bedrooms / 2.5 baths
  • Two-car garage
  • Finished basement
  • Updated kitchen

Comp A—$458,000

Very similar size and condition. Same subdivision.

Strong comp.

Comp B—$462,000

Slightly smaller but similarly updated.

Strong comp.

Comp C—$449,000

Similar size but original kitchen and unfinished basement.

Useful, but subject appears superior.

Comp D—$480,000

Similar size but newer construction and premium lot.

Useful, but comp appears superior.

Comp E—$435,000

Same bedroom count but much smaller, dated and in another neighborhood.

Weak comp.

A bad analysis might average all five.

A better analysis would give the most weight to A and B, use C and D to understand feature differences, and give little weight to E.

That distinction matters.

What NOT to Do When Pulling Comps

Don’t cherry-pick sales that support the answer you want

Buyers do it.

Sellers do it.

Agents can do it too.

If you want the house badly, suddenly every expensive sale looks comparable.

If you’re trying to negotiate aggressively, every low sale starts looking relevant.

Begin with objective property characteristics before looking at prices.

Don’t use only active listings

Listings are competition, not completed market evidence.

A seller can ask anything.

The closed sale tells you whether a buyer actually agreed to pay it.

Don’t automatically choose the nearest properties

Distance matters.

Market similarity matters more.

Don’t blindly use price per square foot

It ignores many qualitative differences.

Use it as one metric among several.

Don’t assume every renovation returns its cost

Market value is not renovation receipts plus house price.

Don’t treat foreclosures or distressed sales like ordinary transactions without context

Fannie Mae allows foreclosures and short sales when they are genuinely appropriate comparables, but their condition and market impact need consideration.

Don’t force every comp to fit

Sometimes the correct conclusion is:

“There aren’t enough truly comparable recent sales.”

That’s better than manufacturing false confidence from bad data.

Can You Use Zillow, Redfin or Public Websites to Find Comps?

Yes—as a starting point.

Public portals can be useful for:

  • finding nearby sales
  • reviewing photos
  • identifying basic property characteristics
  • seeing prior sale dates
  • surveying active competition

But data availability and detail vary.

Professional MLS data can contain information that public portals may not expose consistently, particularly historical listing details, agent remarks, status changes, concessions or property-specific context.

For serious decisions, data provenance matters.

Can You Ask ChatGPT or Another AI to Pull Real Estate Comps?

You can ask AI to help analyze information you provide.

You should be much more careful asking a general-purpose AI model to independently tell you:

“What are the best comps for 123 Main Street?”

unless you know exactly where its current property data is coming from.

There are two separate capabilities:

Reasoning

AI can be extremely good at comparing:

  • property characteristics
  • market patterns
  • strengths and weaknesses
  • renovation differences
  • pricing scenarios

Data access

That is different.

A model can reason brilliantly over incomplete, stale or incorrect data and still produce a convincing-looking answer.

That is why the source data matters so much.

A 2026 Realtors Property Resource survey reported by the National Association of Realtors surveyed 225 NAR-member agents. It found that 92% said they use AI or plan to use it, while 63% identified accuracy of AI outputs as their top concern.

The right question isn’t:

“Is AI good or bad for real estate?”

It is:

What data is the AI reasoning over?

A Better Way to Use AI for Property Analysis

The strongest workflow combines:

reliable property data + comparable sales + market context + AI synthesis

rather than asking an AI model to invent the underlying property facts.

That’s also the idea behind PropGuidePro.

PGP combines current MLS-derived property information with an analysis layer designed to help buyers examine pricing, comparable sales, market context and other property-specific signals in one report.

Instead of asking a generic chatbot:

“Does this house look overpriced?”

you can start with the actual property and give the analysis engine real market information to work from.

Currently, PGP property reports are available for supported MRED markets in Illinois, Wisconsin and Indiana.

What PropGuidePro Does With Comps

A useful comp analysis should not simply dump nearby sales onto the screen.

PGP’s goal is to help answer the questions behind the data:

  • How similar are these properties?
  • Which comps deserve the most weight?
  • Does the listing price appear supported by recent market evidence?
  • Are there property features or renovations that could justify a difference?
  • Does the market evidence suggest the home is fairly priced, above support or potentially attractive?
  • What else should the buyer investigate before making an offer?

That turns comparable sales from a list into a decision tool.

PGP is not an appraisal and does not guarantee valuation accuracy.

PGP Is Not an Appraisal—And That’s Important

A PGP report is not a licensed appraisal.

It also shouldn’t replace:

  • a professional appraisal where required
  • inspections
  • legal advice
  • lender underwriting
  • the judgment of a qualified real estate professional

The purpose is different.

PGP is meant to give a buyer better information earlier in the process.

Before spending hours touring.

Before becoming emotionally attached.

Before deciding how aggressively to offer.

Before simply trusting a list price because it appears on a listing.

So, Is a House Overpriced?

Comps help answer the question—but rarely by themselves.

Good analysis also considers:

  • current competition
  • market direction
  • property condition
  • renovations
  • lot/location
  • concessions
  • unusual property characteristics
  • supply and demand
  • how much adjustment is required to make the comps truly comparable

For a deeper look at the full pricing question, read How to Know If a House Is Overpriced Before You Make an Offer.

The Bottom Line

Real estate comps are one of the most useful tools a homebuyer has.

But pulling comps is easy. Pulling the right comps is the hard part.

Start with closed sales.

Stay within the property’s real competitive market.

Prefer genuinely similar properties over merely nearby ones.

Account for size, style, condition, renovations, location and timing.

Use active listings for context—not as proof of value.

And be careful with any automated or AI tool that cannot tell you where its property data came from.

If you’re buying in a supported MRED market in Illinois, Wisconsin or Indiana, PropGuidePro can help turn the underlying MLS data, comparable sales and market signals into a property-specific analysis.

Return to the PropGuidePro article index for more practical property guidance.