What is Comparable Sales (Comps)?
Comparable sales (comps) are recently-sold properties similar to a subject property, used to estimate market value. A defensible comp set has three to five sales in the last 90 days within a half-mile, matched on bedrooms, bathrooms, square footage (±20%), age (±10 years), and condition.
Comps are the foundation of ARV. Without a defensible comp set, every downstream number is fiction. The discipline is in the filtering — most properties have plenty of "nearby sales," but the question is which ones actually predict your subject's market value.
Adjustments matter as much as selection. A renovated comp isn't a comp for an unrenovated subject unless you scope the renovation that closes the gap. A 4-bed comp isn't a comp for a 3-bed subject at identical square footage. A comp that took 120 days to close at a list-price haircut is data, but it's not the same data point as a 5-day cash sale.
Take the median of qualified comps, not the average — one outlier flip or distressed sale can swing the average by 10-15%. Then stress-test by knocking 3-5% off the median to absorb estimation error.
Concepts that connect.
After Repair Value (ARV) is the projected market value of a property after all planned renovations are complete, based on recently-sold comparable properties in similar condition within a half-mile radius. It is the single most important number in any flip or BRRRR underwrite.
The 70% rule is a flipper's underwriting heuristic: total all-in cost (purchase + rehab + carry + closing) should not exceed 70% of the property's After Repair Value. The remaining 30% covers profit, slippage, and the cost of being wrong.
Maximum Allowable Offer (MAO) is the highest price a wholesaler or flipper can pay for a property and still hit their required profit margin. Derived from the 70% rule: MAO = (ARV × 0.70) − repair costs − assignment fee.
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