What Is Comps Analysis?
Comps analysis compares your property to recently sold, similar properties in the same area. You adjust for differences in size, condition, location, and features to estimate value. In BRRRR, comps analysis drives your ARV estimate—the foundation of forced equity and equity capture math. Conservative comp selection reduces appraisal gap risk. The appraisal process uses the same methodology; your analysis should align with what appraisers typically use. A CMA (competitive market analysis) is a related tool often used by agents.
Comps analysis is the process of using comparable sales (comps) to estimate a property's value—essential for ARV estimates, after-repair appraisal validation, and BRRRR underwriting.
At a Glance
- What it is: Using comparable sales to estimate property value through adjustment and comparison.
- Why it matters: Drives ARV estimates for BRRRR; informs purchase price and renovation scope.
- Key detail: Use 3–6 comps; adjust for size, condition, location; prefer recent sales (90 days).
- Related: Comparable sales, ARV, appraisal, after-repair appraisal.
- Watch for: Cherry-picking high comps; ignoring condition differences; using stale or distant comps.
How It Works
Source comps: MLS, public records, or agent-provided data. Filter for: same property type (SFR, duplex, etc.), same neighborhood or within 1 mile, similar size (±20% sq ft), recent sales (ideally 90 days, max 6 months).
Adjust for differences: Size—$/sq ft adjustment. Condition—adjust for deferred maintenance or upgrades. Location—same street vs. busy road. Features—garage, pool, lot size. Bed/bath count. Document each adjustment.
Reconcile: Weight the adjusted values. Closer comps and more recent sales get more weight. Outliers get less. Arrive at a value range; use the conservative end for BRRRR.
ARV application: For ARV, use comps of similar renovated properties. Your tenant-ready rehab should bring the property to comp condition. If comps show $200–$220/sq ft for renovated homes, and yours is 1,200 sq ft, ARV range is $240,000–$264,000. Use $240,000 for underwriting.
Real-World Example
Linda is underwriting a BRRRR in Cincinnati. She pulls 5 comps: 3 renovated SFRs sold in the past 60 days, 1,100–1,350 sq ft, same zip. Sale prices: $182,000, $195,000, $198,000, $205,000, $212,000. She adjusts for size and condition. The $212,000 comp had a finished basement—she adjusts down. The $182,000 was a quick sale—she checks for distress. Her adjusted range: $188,000–$202,000. She uses $192,000 as her conservative ARV—the low end of the range. The after-repair appraisal comes in at $195,000. Her conservative comps analysis prevented appraisal gap and the refinance succeeded.
Pros & Cons
- Drives accurate ARV estimates for BRRRR underwriting.
- Reduces appraisal gap when done conservatively.
- Informs renovation scope and value engineering.
- Aligns your estimate with appraisal methodology.
- Requires data access (MLS or paid tools).
- Subjective adjustments—different analysts may reach different values.
- Market can move between analysis and after-repair appraisal.
- Limited comps in some markets.
Watch Out
- Optimism bias risk: Picking the highest comps inflates ARV. Use the conservative end of the range.
- Condition mismatch risk: Comps must match your post-rehab condition. Don't use fully renovated comps if you're doing light tenant-ready rehab.
- Stale comp risk: Sales older than 6 months may not reflect current market. Prefer 90-day comps.
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The Takeaway
Comps analysis is the foundation of ARV estimation for BRRRR. Use comparable sales of similar renovated properties, adjust for differences, and use conservative values. Your after-repair appraisal will use the same methodology—alignment reduces appraisal gap risk.