What is a "comparable sale" or "comp" in real estate appraisal?

A "comparable sale," often referred to as a "comp" in real estate appraisal, is defined as a recently sold property that is similar to the subject property being appraised. This definition is essential because appraisers rely on comps to establish a market value for the property in question. By analyzing the sale prices of these similar properties, appraisers can make informed adjustments based on differences in characteristics such as location, size, condition, and amenities.

Using comparable sales allows appraisers to gauge what buyers are willing to pay for similar homes in the same market. This comparative analysis is crucial not only for accuracy but also for maintaining a standard that meets both industry and regulatory guidelines. Therefore, the emphasis on recent sales helps ensure that the data reflects current market conditions.

In contrast, the other options do not accurately capture the essence of a comparable sale. Foreclosed properties or those owned by the appraiser may not reflect current market trends, while a property with only similar size and shape lacks the necessary context of recent sale activity, which is foundational to determining market value. The focus on recent transactions combined with similarity in key attributes is what truly defines a comp.