What are comparables or comps?
Most properties are purchased utilizing the leverage (more commonly referred to as other peoples’ money) of borrowed funds. A lender will always insist that an appraisal be prepared to assure that the underlying asset value is sufficient to cover the amount borrowed should a buyer default on the note and the lender ends up in an ownership position. “Comps” are properties similar to the one you are contracted to purchase (usually sold within the last six months) that are compared side-by-side to the “subject” property.
Comparables is a term for the analysis of comparable properties in an area around a potential listing that have recently sold or that are currently on the market. The purpose of this analysis is to determine properly the best price at which to offer the property on the market to attract potential buyers.
