What are "comparables" used for in real estate?

"Comparables," often referred to as "comps," are properties that are similar in characteristics to the property being evaluated, and they are essential in determining the market value of that property. Real estate professionals analyze these comparable properties, which have recently sold in the same area, to gauge what buyers are willing to pay. This process often involves looking at factors such as location, size, age, and features of the properties in question to arrive at an accurate assessment of value.

Using comparables allows for a more objective analysis as it grounds the valuation in actual market activity rather than purely subjective judgement. The data derived from comps can guide sellers in setting asking prices or help buyers in making informed offers based on fair market value. This method is a foundational principle in real estate appraisals and sales, providing a reliable benchmark against which to assess other properties.